The management of Diamond Bank Plc, on Monday denounced rumor in the media of its purported acquisition by Access Bank Plc.
In a three-paragraph statement, the bank stated “categorically” that it “is not in discussions with any financial institution at the moment on any form of merger or acquisition.”
On its part, Access Bank notified the Nigerian Stock Exchange and the general public that it “has not entered any such discussions with Diamond Bank, or any other institution.”
As a publicly quoted company built on best practice, Access Bank said it “is fully aware of its disclosure obligations in respect of any such corporate action and will always discharge its obligations in the most professional manner.”
The statement by Sunday Ekwochi, Access Bank’s company secretary said any statement regarding any such corporate actions that is not issued by it should be discussion.”
Lagos based The Nation newspaper, on Monday reported that Access Bank is in talks to acquire Diamond bank “in the next few months,” and that both institutions have agreed “in broad terms on the acquisition,” quoting “sources.”
“What is left is the valuation of assets, with a view to determining the level of compensation and systems’ integration.”
The newspaper “learnt that the development leading to the impending acquisition was triggered by Diamond Bank directors who approached Access Bank for intervention in a bid to stave off a possible regulatory intervention that could lead to the withdrawal of the lender’s operating licence in the light of the bank’s depleting capital adequacy ratio on account of a huge Non Performing Loans (NPLs) portfolio put at over N150bn.
“The Nation gathered that Access Bank directors examined the proposal and, after series of meetings and evaluations, accepted to acquire the entity. However, the agreement so far reached, it was understood, will not alter the name of Access Bank nor its management structure,” it added.
Diamond Bank’s large branch network is believed to be a major reason why Access Bank is accepting the offer, while the “burgeoning NPLs” posed serious concerns, almost becoming a disincentive. This has however been addressed, the source told The Nation.
The rush to close the deal was said to have been informed by the recent CBN liquidation of Skye Bank and the fact that the apex bank is not disposed to taking the same route anymore, due to the huge cost implication that a bailout of Diamond Bank might require.
Recall that Diamond Bank, in a dramatic twist on October 25, 2018, announced the exit of Seyi Bickersteth, its chairman, who had bear spent three months on the saddle, along with three others over a planned the recapitalization by an unnamed investor on the condition that Uzoma Dozie, chief executive of Diamond Bank relinquishes his office.
This, the bank denied, insisting that although it required fresh capital injection, it would rather grow organically yet.
Last week, Bloomberg reported Bickersteth has denied his purported resignation from the position.