Done Deal! Access, Diamond Banks Merger Scales Major Hurdle

Mixed reactions have continued to trail the acquisition of diamond bank, by access bank, a Nigerian multinational commercial bank. However, both banks are expected to start operating as a single entity from April 1, 2019, which would be under a new enlarged Access Bank brand.

But finalizing the merger, according to analysts, would be after the deal 2019-03-12has been sanctioned by the Federal High Court expected in the coming weeks, followed by final Securities and Exchange Commission and Central Bank of Nigeria regulatory approvals.

Since the takeover bid by Access bank, Stakeholders of both entities have expressed delight over the merger deal; saying that coming together would make the entity stronger and able to offer more opportunities for its employees, more products and services for customers and more benefits for all stakeholders.

The Central Bank of Nigeria (CBN) and the Securities Exchange Commission (SEC) had earlier granted approvals-in-principle for the respective schemes of merger of both banks. Subject to final regulatory approvals, including the High Court Sanction of the Scheme, the combined business is expected to start operating on April 1, 2019.

INVESTORS’ REACTIONS:

Boniface Okezie- Shareholder

Commenting on the development, Mr. Boniface Okezie in an interview said: ‘‘I’m happy that the shareholders of Diamond bank have supported this merger. As a shareholder of Access bank, I believe the merger will bring together the complementary retail and corporate banking capabilities of two of Nigeria’s leading banks; creating Africa’s largest retail bank by customer base and gateway to the world.

‘‘Diamond Bank has a strong retail franchise especially on the liability side, giving it the lowest funding cost among peers. A merger with Access Bank, which still has a relatively high funding cost, will help the bank grow low cost liquidity base.

‘‘In addition, I believe the combined entity is poised to deliver more opportunities to customers and shareholders, leveraging on shared; yet distinct areas of strength in both banks. Shareholders of both banks have applauded the merger because the stakeholders of the two entities considered the deal a comfortable marriage.

‘‘However, investors in the two banks will be looking forward to the first quarter financials result, as well as the balance sheet and financial report to determine if the merger was a wise decision. Pending the approval by the Central Bank of Nigeria and the release of details of the merger agreement, I’m of the view that the merger will be a positive for Access Bank.

 

Aruna Kebira: Stockbroker and Market Analyst

In his opinion believes that both banks will complement each other. According to him, ‘‘there will be synergy between the two banks. The merger will leverage on Diamond bank large branch network.

With the new merger, both banks (Access and Diamond) will leverage on their distinct potentials to build a stronger bank. Both banks have complementary operations and similar values, and a merger with Diamond Bank, with its leadership in digital and mobile-led retail banking, could accelerate Access’ strategy as a significant corporate and retail bank in Nigeria and a Pan-African financial services champion.

Right now, Diamond bank has about 28billion shares that would add to the existing shares of Access bank. With such large volume of shares, I think there will definitely be share reconstruction, though that would not happen immediately, but in the distant future.

 

Otunba Dele-Smith, MNIM, MIoD (LOND), former Council Member, Lagos Chamber of Commerce & Industry

As far as he is concerned, ‘‘We all know that Diamond bank went down for reasons of mismanagement. It is always good to let competent people run any business. When outsiders, I mean foreign investors were in charge of Diamond bank, the bank was doing very well.

The bank was posting good results, until the foreign investors pulled out of the business and that was the genesis of Diamond bank problem. You see, I will never allow my children to run my business no matter how well they are educated. Foreign investors ran the bank successfully until Uzoma, the son of the Chairman of the bank; Edozie took over management of the bank. The lesson here is that inexperienced children should never be allowed to run an enterprise as sensitive as a bank.

However, Diamond had a pedigree as a bank and with it coming to together with another bank as Access bank, both bank will be able to form a formidable banking alliance, leveraging on the respective areas of strength in both banks.

 

For as long as nepotisms is not allowed to rear its ugly head in the management of the new entity, which I believe was the undoing of Diamond bank, the new bank will do well. I believe the new management will be able to take advantage of the large branch network of Diamond bank to excel.

 

Seyi Idowu- Accountant and an active stock trader:

‘I cannot be optimistic until result comes out. I know the shareholders of both banks are delighted over the merger. Diamond bank investors will particularly be happy, because the bank has been saved from extinction, following the merger. I believe that there will be huge gain for the industry.’ He opined.

To this end, I think customers will have nothing to worry about as Diamond Bank joins forces with Access Bank to create one of Africa’s biggest banks. Instead, the customers should get ready to enjoy much more efficient services and benefits.

 

For instance, Diamond Bank’s customers will continue to enjoy DiamondXtra. The reward scheme will remain unchanged, even as new winners will continue to emerge and be paid. As a matter of fact, the merger with Access Bank will ensure that DiamondXtra becomes bigger and better because the scheme will be opened to Access Bank customers as well.

Secondly, Diamond Bank customers will enjoy instant, borderless banking from any Access Bank branch.

In other words, whenever they walk into any Access Bank Plc branch and Initiate payment in their local currency, the beneficiary will receive an instant direct credit to their account or cash in their local currency. This service will be available in all Access Bank subsidiaries in Nigeria, Ghana, The Gambia, Democratic Republic of Congo, Rwanda, Zambia and Sierra Leone.

Oyinkan Olasanoye- National President, Association of Senior Staff of Banks, Insurance & Financial Institutions.

According to her, from the report he’s getting, the merger was expected to lead to a bigger and broader bank.

She noted that Access Bank had always been a reliable part of ASSBIFI, but Diamond Bank was not but with the new plan, she added, Diamond Bank would become part of the union. She said, “So we are monitoring closely what the management plans to do, but at present, we know that there is none of our members that will need to lose their job that will not follow due process.

“But at present, we have written the management to register our interest and I know that the new management of Access Bank will get across to us, telling us the implication on the workforce.”

 

Prof Uche Uwaleke- Head, Banking and Finance Department, Nasarawa State University

Also commenting on the development in a phone chat, he described the merger as a positive development for the banking sector.

“By this merger, Access Bank has emerged as one of the biggest banks in Africa by customer base. The scheme of the merger is a win-win for the shareholders of the two banks.

While Diamond Bank has pioneered Nigeria’s largest technology-led retail banking platform, Access Bank is one of Nigeria’s leading full-service commercial banks. Consolidation in the Nigerian banking industry is an inevitable, natural progression in a sector where the gap between Tier 1 and Tier 2 banks has been widening and scale has become critical, where technology will disrupt the traditional business model while enabling broader financial inclusion.

 

Highlights of expected benefits to the merger:

  • 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.

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