WITH the merger between Access Bank and Diamond bank, the bank is set to be the largest retail bank in Nigeria and in Africa as its customer base would span three continents, 12 countries and 29 million clients.
Access Bank Chief Executive Officer, Access Bank, Herbert Wigwe, at a joint press conference on Wednesday, explained that the merger, which would be completed by the second half of 2019, would deepen financial funding as its customer base increase, while noting that the merger was the best recorded in the history of the bank.
According to Wigwe, 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, would accelerate Access Bank’s ambition to become a leading corporate and retail bank in Nigeria and a Pan-African financial services champion.
Following the signing of the Memorandum of Agreement and announcement of headline terms, which valued Diamond Bank at approximately NGN72.5 billion ($200m) and will see Diamond Bank shareholders receive NGN3.13 per share in cash and shares,
Transaction to be concluded via Scheme of Merger following Access Bank and Diamond Bank Court Ordered Meetings expected in March 2019 to approve terms. Subject to shareholder approvals, final Security Exchange Commission, Central Bank of Nigeria and Pension Commission regulatory approvals and FHC sanction expected before the end of H1 2019.
Addressing journalists as well, CEO of Diamond Bank, Uzoma Dozie said the merger was positive for all of Diamond Bank stakeholders, including customers, employees and shareholders.
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“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, Dozie said.
Cost synergies had been conservatively estimated at NGN30 billion per annum, pre-tax, to be fully realised within three years post-completion. Further revenue and balance sheet synergies to be evaluated by a joint implementation committee.
The pro-forma capital position of the merged bank will be in full compliance with regulatory requirements for significant financial institutions with an international banking presence. However, in order to meet international standards of best practice and ensure a robust capital buffer, Access Bank and Diamond Bank have jointly agreed on a strategic capital management plan and expect to achieve a post-completion Capital Adequacy Ratio (“CAR”) of 20% at the Bank level and 22% at the Group level.
Access Bank had a capital adequacy ratio of 20.1% as at 30 September 2018. It is currently concluding a US$250m Tier II capital raising exercise in line with its capital plan to provide a robust capital buffer given the current macroeconomic environment.
The Board of Diamond Bank has confirmed to Access Bank that it intends to take a further impairment on its loan book in line with its IFRS 9 implementation by its financial year end on 31 December 2018. Access Bank has sufficient capital headroom to conclude its merger with Diamond Bank after the write-down.