Lagos, Nigeria, 19 December 2018 – The Boards of Access Bank Plc (“Access Bank”) and Diamond Bank Plc (“Diamond Bank”) as we speak announce that they’ve acquired “No Objection” from the Central Bank of Nigeria (“CBN”) relating to a possible merger between the 2 banks, which is predicted to full within the first half of 2019. Transaction completion is topic to Access Bank and Diamond Bank acquiring shareholder and regulatory approvals (Central Bank of Nigeria, the Securities and Change Fee, the Federal Excessive Courtroom (“FHC”) and the Nationwide Pension Fee (“PenCom”)).
Following the signing of the Memorandum of Settlement and announcement of headline phrases, which valued Diamond Bank at roughly NGN72.5 billion (~$200m) and can see Diamond Bank shareholders obtain NGN3.13 per share in money and shares, Access Bank and Diamond Bank are as we speak saying additional particulars, together with the rationale and advantages of the deal, the estimated value synergies, the capital administration plan and the timetable.
• Merger will type a number one Tier 1 Nigerian bank and the largest bank in Africa by quantity of clients, spanning three continents, 12 nations and 29 million shoppers.
• Brings collectively treasury, danger administration and company banking experience with robust retail and digital banking capabilities to create a monetary establishment working throughout the complete suite of merchandise for all buyer segments.
• Transaction to be concluded by way of Scheme of Merger following Access Bank and Diamond Bank Courtroom Ordered Conferences anticipated in March 2019 to approve phrases. Topic to shareholder approvals, ultimate SEC, CBN, and PenCom regulatory approvals and FHC sanction anticipated earlier than finish of H1 2019.
• Value synergies conservatively estimated at NGN30 billion every year, pre-tax, to be absolutely realised inside three years post-completion. Additional income and stability sheet synergies to be evaluated by joint implementation committee.
The professional-forma capital place of the merged bank can be in full compliance with regulatory necessities for vital monetary establishments with a world banking presence. Nevertheless, so as to meet worldwide requirements of greatest apply and guarantee a strong capital buffer, Access Bank and Diamond Bank have collectively agreed a strategic capital administration plan and anticipate to obtain a post-completion Capital Adequacy Ratio (“CAR”) of 20% on the Bank degree and 22% on the Group degree. The important thing parts are:
• Diamond Bank to take additional impairments consistent with IFRS9, to be mirrored in yr finish 2018 outcomes.
• Access Bank has already finalised phrases and obtained regulatory approvals for a Tier II capital issuance, which can increase US$250 million, obtainable for drawdown in January 2019.
• Access Bank has additionally obtained “No Objection” from the CBN to undertake a Rights Challenge to increase up to NGN 75 billion (~US$ 207 million) in H1 2019. Shareholder approvals and different regulatory approvals can be obtained earlier than the supply opens. This accelerates the capital administration plan to help retail progress, beforehand set out within the Bank’s five-year technique
Commenting on the proposed merger, Herbert Wigwe, CEO of Access Bank, stated: “I’m delighted to announce that we have now acquired the required regulatory approvals to pursue a merger with Diamond Bank, one of Nigeria’s foremost digital and retail banks, topic to remaining regulatory and shareholder approvals. The mixture of our two companies will create the largest retail bank in Africa by buyer base and a really vital participant within the Nigerian market. This can be a large step in the direction of the supply of our objective to deliver the facility of banking to tens of millions of individuals throughout Nigeria and an thrilling transaction for Access Bank and Diamond Bank’s clients, employees and shareholders.
“We now have a transparent plan to keep our capital power and are saying at present decisive steps by each banks to guarantee their monetary stability all through the method. The general end result will probably be a secure establishment with a particularly robust capital adequacy ratio of greater than 20% following completion of the merger, which will probably be a number one competitor in all of the markets by which it operates.
“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, will accelerate our ambition to become a leading corporate and retail bank in Nigeria and a Pan-African financial services champion. We look forward to bringing our discussions to a successful conclusion and delivering the benefits of the merger to our staff, customers, shareholders and other stakeholders.”
Uzoma Dozie, CEO of Diamond Bank, stated: “The merger is constructive for all of Diamond Bank stakeholders, together with clients, staff and shareholders. Particularly, clients will profit considerably by way of the unrivalled mixture of the perfect of Diamond Bank’s retail and digital management with the dimensions of Access Bank’s stability sheet, company names and geographical attain.
“In reaching this determination, the shared ardour for leveraging Nigeria’s youthful and entrepreneurial expertise, and a dedication to higher outcomes by means of monetary inclusion have satisfied us that that is the appropriate mixture.
“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.”
Rationale for and advantages of the transaction
Diamond Bank will profit from Access Bank’s robust tradition of danger and capital administration experience and a transparent technique for sustainable progress. Access Bank will take benefit of Diamond Bank’s unparalleled retail banking experience and powerful digital providing. Collectively, the 2 corporations would create one of Nigeria’s main banks, with 29 million clients, together with greater than 13 million cellular clients, in addition to three,100 ATMs and round 32,000 PoS terminals.
Diamond Bank and Access Bank share many of the identical areas of focus, together with ladies, youth, entrepreneurs and the financially excluded and will probably be in a position to additional develop their positioning and market management in these progress sectors. Diamond Bank’s company clients may even give you the chance to profit immediately from Access Bank’s company experience in commerce finance, money administration, treasury and company finance.
Diamond Bank presently has 19 million clients, together with 10 million cellular customers. The mixed operation could have relationships with each MTN and Airtel, making certain that clients of the merged bank will proceed to entry a robust cellular banking proposition. Access Bank and Diamond Bank additionally function from the identical know-how platform, which the Boards consider will allow them to full the mixing with minimal disruption or impression on clients, as well as to producing vital synergies.
Robust monetary profile
Access Bank had a capital adequacy ratio of 20.1% as at 30 September 2018. It’s presently concluding a US$250m Tier II capital elevating train in keeping with its capital plan to present a strong capital buffer given the present macro-economic setting.
The Board of Diamond Bank has confirmed to Access Bank that it intends to take an extra impairment on its mortgage e-book consistent with its IFRS 9 implementation by its monetary yr finish on 31 December 2018. Access Bank has adequate capital headroom to conclude its merger with Diamond Bank after the write down.
The professional-forma CAR of the mixed entity shall be in full compliance with regulatory necessities on the time of completion. Nevertheless, Access Bank has additionally accelerated its capital plan, by which it had anticipated elevating further capital to fund retail enlargement, to make sure that the quantum and timing take account of the deliberate merger. It has obtained a CBN “No Objection” for a Rights Concern of up to NGN75 billion (~US$207 million) to be launched in H1 2019, which can make sure that it continues to keep a robust capital buffer above the minimal necessities. A proper notification for an EGM to search shareholder approval for the rights difficulty shall be issued shortly.
The transaction additionally presents the chance for vital value synergies to be derived from consolidation of help features and processes, the advantages of scale, department consolidation and HQ centralisation. These are conservatively estimated to be NGN30 billion every year, pre-tax, to be absolutely realised three years post-completion.
As well as, there are income synergies, akin to these from the alternatives created by making use of Access Bank’s worth chain strategy to Diamond Bank’s present 19 million-strong buyer base, together with the constructive impression of Diamond Bank’s NGN1 trillion low value deposit base on Access Bank’s value of funding, enhanced danger administration and yield and worth enhancements pushed by market share. The funding and capital synergies are additionally engaging, with an improved deposit combine, improved entry to capital markets and higher effectivity in treasury operations.
A Joint Implementation and Integration Committee has been established to make sure that these synergies are correctly evaluated and the ensuing revenue and progress potential realised.
Administration and integration
Access Bank plans to leverage the perfect expertise of each banks and mix them to create a number one banking franchise in Nigeria. The mixed bank shall be led by Access Bank’s present CEO, Herbert Wigwe, and can retain the Access Bank identify. It’s meant that the model might be redesigned to embrace robust parts of Diamond Bank’s digital and retail model.
Access Bank has a robust monitor document of M&A in Nigerian banking and has beforehand demonstrated its integration capabilities within the profitable acquisition and subsequent absorption of six establishments up to now 15 years. The identical group who led this profitable integration shall be chargeable for delivering the merger with Diamond Bank and overseeing the transition to the enlarged entity.
The next units out the envisaged timetable for completion and related shareholder and regulatory approvals. The Boards of Access Bank and Diamond Bank reserve the proper to change the timetable if transaction exigencies require.
17 December 2018 Signing and announcement of proposed merger
Week of 17 December 2018 CBN pre-merger submitting
SEC pre-merger notification
December 2018 CBN approval in precept
January 2019 SEC clearance of Scheme of Merger
March 2019 Access and Diamond Banks’ Courtroom-Ordered Conferences
April/Might 2019 SEC and CBN remaining approvals
By finish of June 2019 Deal completion
ACCESS BANK as at 30.9.18 DIAMOND BANK as at 30.9.18 Indicative proforma (as reference) as at 30.9.18
Complete Belongings (NGN’Bn) four,555 1,555 6,110
Internet loans (NGN’Bn) 1,976 730 2,706
Buyer deposits (NGN’Bn) 2,475 1,068 three,543
Quantity of clients (million) 10 19 29
Cellular clients (million) three 10 13
Digital/monetary inclusion clients (‘000s) 6,400 7,000 13,400
Quantity of branches 400 277 677
Quantity of ATMs 1,881 1,218 three,099
Playing cards in concern 5,700,000 10,200,000 15,900,000
Quantity of POS 17,943 14,115 32,058
Citigroup International Markets Restricted and Chapel Hill Denham Advisory Restricted acted as Monetary Advisers to Access Bank whereas Banwo & Ighodalo acted as Authorized Adviser to Access Bank.
Exotix Capital acted as monetary adviser to Diamond Bank and Templars acted as Authorized Adviser to Diamond Bank.
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