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Access Bank expects naira devaluation to have ‘little’ impact on business

Access bank

Access Bank does not expect to take a hit from the naira’s devaluation, its chief executive said on Wednesday, because many of its customers are generating revenues in foreign currencies.

However, the devaluation will probably dampen foreign investor demand for Access Bank’s 68 billion naira ($385 million) rights issue, Chief Executive Herbert Wigwe told Reuters.

He added that falling oil prices would also lessen appetite for the issue from Nigeria’s fourth-largest lender.

Local investors are expected to help plug any hole and the bank still anticipates raising an “acceptable portion” of the total, Wigwe said in an interview in Johannesburg.

Nigeria’s central bank devalued the naira by 8 percent and raised interest rates by 100 basis points on Tuesday, hoping to stem foreign reserves losses from defending the currency against weaker oil prices.

“It is little or nothing in terms of the implications to my financials just because of where my lending is,” Wigwe said, noting that customers generating revenue in other currencies were less exposed to a weaker naira.

Domestic interest rates are likely to rise by 200 basis points and hurt lending to the manufacturing and trade business sectors, he said.

Wigwe said the bank had also been cleared of any wrongdoing after a Securities and Exchange Commission investigation into the freezing of its share price in September.

The Nigerian Stock Exchange suspended the shares for a week after Access Bank applied to the bourse arguing that information on its capital raising was not publicly available and that it wanted to avoid speculation in its shares.

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Wigwe said Access, which has operations in nine countries and a representative office in China, was evaluating the business case for expansion into Mozambique, Kenya and Tanzania.

The bank expanded into retail operations after the acquisition of failed Intercontinental Bank, which gave it seven million customers. Wigwe said he hoped to have 25 million users signed on by 2017 to diversify funding.

Access shares are down 18 percent so far this year in line with the Nigerian index’s 16 percent decline.