BusinessDay

Updated: Access, Diamond Bank shareholders approve merger

…aggressive loan recovery seen post-completion

The shareholders of Access Bank plc on Tuesday approved the scheme of merger with Diamond Bank plc.

At a court-ordered meeting held in Lagos, 1,569 shareholders of Access Bank plc who own 14.405 billion units voted. A total of 1,529 voted for the merger, 10 voted against it, while 30 shareholders were absent. The shareholders that voted represent 97.89 percent, while those that voted against represent 2.10 percent.

The shareholders who lauded the board and management of Access Bank for the decision to combine business with Diamond Bank also urged the former to aggressively go after debtors of Diamond Bank.

Herbert Wigwe, GMD, Access Bank, assured the shareholders that their request on loan recovery was in line with the enlarged entity’s plan.
“All of us here have the same objective and there is no way the cost of the scheme of merger should be higher than the benefits of the merger,” Wigwe said.

“Diamond Bank has its own benefit, its retail reach. This merger will go a long way in improving returns-on-equity,” he said.

Also at a court-ordered meeting of Diamond Bank plc on Tuesday, the voting results at the resolutions showed that 99.98 percent (representing 15.1 billion shares) of Diamond Bank shareholders voted in favour of the merger; 0.02 percent voted to abstain from the merger, while there was not a single vote against the merger.

With the approvals, the solicitors of the banks will be seeking orders of the court sanctioning the scheme and the resolutions at the meetings as well as such other incidental, consequential or supplemental orders as are necessary or required to give full effect to the scheme.
The court-ordered meetings by both banks followed the signing of the Memorandum of Agreement and announcement of headline terms, which valued Diamond Bank at approximately N72.5 billion ($200 million) and will see Diamond Bank shareholders receive N3.13 per share in cash and two of Access Bank’s shares for every seven of Diamond Bank.
Following the approvals by the banks’ shareholders, regulatory approvals from the Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC) are expected to be obtained this month.

A timely approval from the CBN and SEC is crucial for the banks to meet the April 2019 timeline given for the completion of the merger.
At the close of market on Tuesday, Access gained 0.8 percent to N6/share while Diamond was flat at N2.50/share.

Chapel Hill Denham Advisory Limited and Union Capital Markets Limited are acting as financial advisers in respect of the scheme of merger between Access Bank plc and Diamond Bank plc.
Access Bank and Diamond Bank had announced further details post-merger which included the rationale and benefits of the deal, the estimated cost synergies, the capital management plan and the timetable.

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. It will bring 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.

The merger’s cost synergies, conservatively estimated at N30 billion per annum pre-tax, are to be fully realised within three years post-completion.

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 percent at the bank level and 22 percent at the group level.

 

Iheanyi Nwachukwu & Lolade Akinmurele

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