Diamond, Access banks give merger details

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Nigerian lenders, Access and Diamond banks have given details of their plan after receiving no objection from the Central Bank of Nigeria (CBN).

The merger which was confirmed three days ago will have combined assets of N6.11 trillion, total customers of 29 million and combined deposits of N3.543 trillion.

The banks in a statement on Wednesday said they expect to complete the process by the end of June, 2019.

According to the banks, the “Merger will form a leading Tier 1 Nigerian bank and the largest bank in Africa by number of customers, spanning three continents, 12 countries and 29 million clients.

“Brings together treasury, risk management and corporate banking expertise with strong retail and digital banking capabilities to create a financial institution operating across the full suite of products for all customer segments.

“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 SEC, CBN, and PenCom regulatory approvals and FHC sanction expected before end of H1 2019.

“Cost synergies 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 joint implementation committee”, the statement explained.

It explained further that 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 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”, it added.

The key elements, according to the banks are that “Diamond Bank to take further impairments in line with IFRS9, to be reflected in year end 2018 results.

“Access Bank has already finalised terms and obtained regulatory approvals for a Tier II capital issuance, which will raise US$250 million, available for drawdown in January 2019.

“Access Bank has also obtained “No Objection” from the CBN to undertake a Rights Issue to raise up to NGN 75 billion (~US$ 207 million) in H1 2019. Shareholder approvals and other regulatory approvals will be obtained before the offer opens. This accelerates the capital management plan to support retail growth, previously set out in the Bank’s five-year strategy”.

In his comments, CEO of Access Bank, Herbert Wigwe, said: “I am delighted to announce that we have received the necessary regulatory approvals to pursue a merger with Diamond Bank, one of Nigeria’s foremost digital and retail banks, subject to final regulatory and shareholder approvals. The combination of our two businesses will create the largest retail bank in Africa by customer base and a very significant player in the Nigerian market. This is 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”.

On his part, CEO of Diamond Bank, Uzoma Dozie, said: “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”.

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