Discussions on the acquisition are on, according to sources, who said the fusion is set for the first quarter of next year, by both financial institutions have reached an agreement in broad terms on the acquisition, what is left is the valuation of assets, with a view to determining the level of compensation and systems’ integration.

It was learnt that the development leading to the impending acquisition was triggered by Diamond Bank directors who approached Access Bank for intervention in a bid to stave off a possible regulatory intervention that could lead to the withdrawal of the lender’s operating licence in the light of the bank’s depleting capital adequacy ratio on account of a huge Non Performing Loans (NPLs) portfolio put at over N150 billion.

Already, Access Bank directors have examined the proposal and after series of meetings and evaluations, accepted to acquire the entity. However, the agreement so far reached, it was understood, will not alter the name of Access Bank nor its management structure.

“It’s a complete acquisition and not a merger,” a source, who asked not to be identified, but who is familiar with the transaction, said, adding that one of the major considerations that swayed Access Bank’s directors in accepting the offer was the large branch network of the lender.

“It’s burgeoning NPLs, however, was of serious concern to Access Bank and almost becoming a disincentive, but it has been addressed,” the source added.

It was also gathered that the CBN is well acquainted with the development. The regulator’s acquiescence to the deal was informed by the recent event that led to the liquidation of Skye Bank, and the apex bank not being disposed to following that route because of the huge cost implication that a bailout of Diamond Bank might require, encouraged the discussions, “and the regulator is pleased with the level of discussions so far.

“The CBN encouraged the ongoing arrangement, given the fate that befell the defunct Skye Bank a few months ago. The apex bank gave its consent and approval for the actualisation of the marriage,” the source further stressed.

Bloomberg reported that a major investor was in the process of injecting funds into Diamond Bank on condition that the CEO, Uzoma Dozie, exits his position. The report attributed to the Chairman, Seyi Bickersteth, has since been denied by the bank.

Diamond is one of a number of smaller Nigerian lenders struggling to maintain a regulatory requirement for banks with international operations to have reserves of capital that cover at least 15 percent of outstanding loans. The company’s ratio stood at 16.3 percent at the end of September, the lender has said.

The bank cut its full-year profit forecast by more than half on Tuesday after income from operations declined. It now expects profit before tax to reach 3.8 billion naira ($10.4 million), down from a previous target of 8 billion naira.

The shares rose 2.5 percent on Wednesday, trading at 1.21 naira at the close in Lagos. The stock is down 19 percent this year, compared with a 12 percent fall on the NSE Banking 10 Index.

Diamond Bank, in a statement, said contrary to media articles, “the Board wish to clarify that the company has not received an offer from an investor to inject cash. Further to the Company’s announcement of 26 October 2018, Diamond Bank and its Board of Directors continue to review all strategic options on a regular basis.

“Diamond Bank would also like to clarify it enjoys the support of its major shareholders, including The Carlyle Group and Kunoch Holdings who are, as ever, working in cooperation with the Board and management as appropriate to ensure the successful operation of its business in Africa’s most dynamic banking market.

“Further to the announcement of 24 October 2018, Diamond Bank is in active discussions with regards to the appointment of new non-executive directors to the Board and, subject to CBN approval, these will be announced in due course.”

“Diamond Bank’s recent Third Quarter results published on October 26, 2018 show the business continues to execute its clearly articulated tech-led retail strategy despite headwinds in the Nigerian economy,” the bank stated.

The post Access Bank may acquire Diamond Bank soon – Sources appeared first on New Mail Nigeria.

Actis DB Holdings Limited currently holds 14.79 percent of the issued share capital of Diamond Bank.

Funds managed by Actis, a private equity investor specialising in investments in emerging markets, acquired a significant equity stake in the bank in 2007.

These funds are now coming to the end of their closed-end period and, accordingly, Actis is realising its investment in the bank, Diamond Bank said in a statement to the Nigerian Stock Exchange on Friday.

The bank said that positive contributions by Actis, other institutional investors and the new management team of the have created additional value for all Diamond Bank’s shareholders.

Peter Schmid, Actis Head of Private Equity said that “We have worked with Diamond Bank to build a strong franchise over the last seven years. During the period of our investment, Diamond Bank underwent substantial change and is now recognised by the Central Bank of Nigeria as one of the systemically important banks in the industry.

“The bank has a strong and capable management team to take it to the next stage of its development and Actis wishes Alex and his team well in this next phase.”

Dr. Alex Otti, Group Managing Director of Diamond Bank said the bank was pleased to have worked with Actis over the last seven years, and are excited about the next stage of its development. “Diamond Bank is one of the leading retail banks in Nigeria, with exciting growth prospects in the retail segment of the Nigerian economy as well as a strong position in the Micro, Small and Medium Scale Enterprises and corporate segments of the economy.

“Diamond Bank has been described as one of the fastest growing Banks over the past three years in the Tier II category and potentially the next bank that would move to the Tier I category. The Bank is currently undertaking a Rights Issue to raise an additional N50.3 billion which is expected to position the Bank to further enable it to execute its strategy going forward,” Otti said.

Follow Us

The post Kunoch Holdings acquires Actis, CDC stake in Diamond Bank appeared first on New Mail Nigeria.