The management of Access Bank Plc, on Wednesday said it has received regulatory approvals and finalised terms to raise $250m in Tier II capital, which will be available for drawdown in January 2019.
Addressing newsmen during a joint press conference organized jointly with Diamond Bank to give details of the ongoing business combination arrangement that will give birth to Nigeria and Africa’s largest bank by customer base.
The bank also obtained “No Objection” from the CBN to undertake a Rights Issue to raise up to NGN75bn (about US$207m) by 2019 half year, which will open after shareholder and other regulatory approvals have been obtained, thereby accelerating its capital management plan needed to support retail growth, as set out in the Access Bank’s five-year strategic plan.
With 19m customers, including 10 million mobile users, from Diamond Bank, the emergent entity, is expected to have 29m customers, including over 13m mobile customers, as well as 3,100 ATMs and around 32,000 Point of Sale (PoS) terminals. Their combined operation will have relationships with both MTN and Airtel, ensuring that customers continue to access a strong mobile banking proposition.
They also said given that Access Bank and Diamond Bank operate from similar technology platform, hopes that the integration process will be completed with minimal disruption or impact on customers, in addition to generating significant synergies.
Also, should the merger takeoff immediately, it will have N6.11tr in total assets, N2.706tr in net loans and N3.543tr in customer deposit.
Commenting on the proposed merger, Herbert Wigwe, chief executive of Access Bank, described it as “a huge step towards the delivery of our goal to bring the power of banking to millions of people across Nigeria and an exciting transaction for Access Bank and Diamond Bank’s customers, staff and shareholders.
“We have a clear plan to maintain our capital strength and are announcing today decisive steps by both banks to ensure their financial stability throughout the process. The overall outcome will be a stable institution with an extremely strong capital adequacy ratio of more than 20% following completion of the merger, which will be a leading competitor in all the markets in which it operates.
“Access Bank and Diamond Bank have complementary operating platforms and similar values, and a merger with Diamond Bank, with its leadership in digital and mobile-led retail banking, will accelerate our ambition to become a leading corporate and retail bank in Nigeria and a Pan-African financial services champion. We look forward to bringing our discussions to a successful conclusion and delivering the benefits of the merger to our staff, customers, shareholders and other stakeholders.”
For Uzoma Dozie, CEO of Diamond Bank, “the merger is positive for all of Diamond Bank stakeholders, including customers, employees and shareholders. In particular, customers will benefit significantly through the unrivalled combination of the best of Diamond Bank’s retail and digital leadership with the size of Access Bank’s balance sheet, corporate names and geographical reach.
“In reaching this decision, the shared passion for leveraging Nigeria’s youthful and entrepreneurial talent, and a commitment to better outcomes through financial inclusion have convinced us that this is the right combination.
“I believe that the combination of two strong and admired brands, with shared values and complementary strengths, will be a strong force for positive change in the Nigerian and African retail landscape. As a result, this merger creates significant potential for sustainable long-term growth which stands to benefit customers, employees and shareholders alike.”
According to the merger timetable, following the pre-merger filings with the CBN, Securities & Exchange Commission, and the Nigerian Stock Exchange (NSE), both banks expect to receive CBN approval in principle. SEC clearance of the Scheme of Merger in
January, after which Court-Ordered Meetings will be organized by Access and Diamond banks in March and then SEC and CBN final approvals in April/May. The deal is expected to be completed by the end of June.
Access Bank assured of plans to leverage the best talent of both institutions and combine them to create a leading banking franchise in Nigeria, to be led by its current CEO, Herbert Wigwe.
While the emergent entity will retain the Access Bank name, the brand will be redesigned to include strong elements of Diamond Bank’s digital and retail brand.
Recall that with a strong track record of Mergers and Acquisitions in the Nigerian banking space, Access Bank has previously demonstrated its integration capabilities in the successful acquisition and subsequent absorption of six institutions in the past 15 years.
“The same team who led this successful integration will be responsible for delivering the merger with Diamond Bank and overseeing the transition to the enlarged entity,” the bank added.