CBN Ignores Protest By Independent Directors, As Access Acquires Diamond Bank

There were indications, Sunday night, that despite a protest letter by the non-executive/independent directors of Diamond Bank Plc, led by Oluseyi Bickerstheth that became public last week, that the Central Bank of Nigeria (CBN) may have approved and is set to announce its acquisition by peer- Access Bank Plc.
The announcement is also coming on the heels of denials by both Diamond and Access Bank when the news of the acquisition deal broke some weeks ago.
A source at Access Bank had confided in our correspondent that his employers were interested in the troubled lender’s customer/deposit base, assuring that all other negatives would be appropriately discounted to ensure that its shareholders are not shortchanged.
As if to give credence to the story, Olufemi Awoyemi, chief executive of Proshare had tweeted through his personal handle of a major industry pronouncement by the CBN on Monday.
Recall that Bickerstheth had emphasized in his letter to the CBN and other regulators that the board of Diamond Bank “never received any expression of interest by Access Bank for any form of merger or acquisition involving both Diamond Bank and Access Bank.”
Online newspaper- TheCable, broke the news of the acquisition citing insiders, who assured that “the official announcement of the transaction will be made in the course of the week by the Central Bank of Nigeria (CBN).”
The acquisition, TheCable reported, was indeed “midwifed by the CBN in a bid to further consolidate the banking industry…”
Diamond Bank received the CBN’s approval to drop its international operating licence in exchange for a national one, which according to Uzoma Dozie, its chief executive in a statement, “supports Diamond Bank’s objective of streamlining its operations to focus resources on the significant opportunities in the Nigerian retail banking market, and the economy as a whole.
“The move follows Diamond Bank’s decision to sell its international operations, which included the disposal of its West African Subsidiary in 2017 and Diamond Bank UK, the sale of which is currently in its final stages.
“The change to national bank status also enables the bank to maintain a lower minimum capital requirement of 10 per cent, as against 15 per cent required for international banks.”
As if sensing the latest move, Fitch Ratings, a fortnight ago, announced a two-notch downgrade of Diamond Bank Plc’s Long-Term Issuer Default Rating (IDR) to ‘CCC’ from ‘B-‘ and Short-Term IDR to ‘C’ from ‘B’.
The move, the agency said, reflects uncertainty over the bank’s solvency and liquidity in view of very weak asset quality, highly vulnerable capital position as well as tight foreign currency (FC) liquidity ahead of an upcoming maturing $200m Eurobond in May 2019.”
Fitch obviously ignored the bank’s assurance concerning the Eurobond, even as it cited the sale of Diamond Bank’s UK subsidiary, warning that “execution may be challenging, especially considering the recent resignation of four board members.”
Reasons for this, it noted, is the fact that Diamond Bank hopes to redeem the Eurobond by negotiating the refinancing of international financial institution funding; improved cash flows from the oil loan book; and the disposal of its UK subsidiary.
The acquisition will also mean that the Diamond Bank brand identity fades off and its assets and liabilities assumed by Access Bank, which before now in its corporate history has so far continues to grow inorganically.