The merger announcement between Access Bank and Diamond Bank set off alarm bells in the financial services sector. Prior to then, there had been rumours that Diamond Bank was going through some difficult times and was looking for suitors. As often happens in this part of the world, foreign entities were being lined up by the rumour mills as the likely buyers. For millions of customers of Diamond Bank, there was the usual jittery of the state of their deposits in the likely event of liquidation.
But along came Access Bank and its merger plans ratified by the Central Bank of Nigeria (CBN).
Although the dust is yet to settle on the merger between Access Bank and Diamond Bank, as it is subject to shareholder and regulatory approvals, the 29 million customers that would emerge from the new entity can now look forward to a future of expanded services and new products.
The merger also means that the new entity has more than 13 million mobile customers, as well as 3,100 ATMs, 15.9 million cards and around 32,000 Point of Sale (PoS) terminals. The new entity hence becomes the indisputable retail bank leader in Nigeria and West Africa.
Its potential for economies of scale is also an advantage for shareholders and depositors as they are left with no doubt as to the commitment of the bank to be the gateway for business, enterprise, and creativity coming into Africa.
According to Herbert Wigwe, the Access Bank Group Managing Director/Chief Executive Officer, “Access Bank and Diamond have complementary operations and similar values and a merger with Diamond with its leadership in Digital and Mobile-led Retail Banking could accelerate our strategy as a significant Corporate and Retail Bank in Nigeria and a Pan-African financial services champion. Access Bank has a strong financial profile with attractive returns and a robust capital position with 20.1 CAR as at 30 September, 2018.”
From his submission above, it is obvious that Access Bank plans to surpass competition on all indices and factors by leveraging on the technological (digital and mobile) strength of Diamond Bank to accelerate its set mission to take over financial territories across Africa. This drive is in line with its five-year strategic plan whose cornerstone is to tell the African story of strength, grit, tradition, and integrity in a way that it hasn’t been done before.
From a small player in the 90s, Access Bank has grown rapidly to be a behemoth in the industry. It became a tier-one Banking institution following the 2004 Consolidation exercise mandated by the Chukwuma Soludo-led Central Bank of Nigeria (CBN) and later took control of Intercontinental Bank Plc. in 2012 – a move which cemented its position as an undisputed top three player in the Nigerian banking industry.
Access Bank’s recent move to take over Diamond Bank is a testament to its ambition to be a leading player in Africa’s financial sector and one to beat in the global space. The Bank recognizes the role technology plays in accelerating these ambitious objectives, it is therefore little wonder that it chose to merge with Diamond Bank – a banking institution known to have grown its asset and customer base with the help of technology.
Uzoma Dozie, Chief Executive of Diamond Bank touched on the similarities of their vision and the role of people and technology in the next growth phase of both companies saying: “There is a clear strategic rationale for the proposed merger and strong complementarities between the two institutions. 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.”
The proposed merger will involve Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger. Based on the agreement reached by the Boards of the two banks, Diamond Bank shareholders will receive a consideration of N3.13 per share, comprising of N1.00 per share in cash and N2.13 per share equivalent in newly issued shares of Access Bank to be exchanged for the outstanding shares of Diamond Bank.
The offer represents a premium of 260% to the closing market price of N0.87 per share of Diamond Bank on the Nigerian Stock Exchange as of December 13, 2018, the date of the final binding offer.
If regulatory approvals are received by the bank stakeholders and the Securities and Exchange Commission which recently signifies that it is aware of the proposed merger, it will definitely be one of the most significant corporate deals in sub-Saharan Africa this year.
