Ayo Alonge
The strategic merger of Access Bank with the erstwhile Diamond Bank is first with a recourse to the fact that such is expectedly needful for consolidating the financial capacity of banking operations in Nigeria.
In an announcement that hit the banking industry by storm, two of Nigeria’s leading banks, Access Bank and Diamond Bank, announced a proposed merger which will see the former become the largest bank in Nigeria in terms of asset base and Africa’s biggest retail bank in terms of customer base.
Financial pundits have had to say that the merger is a welcome development as it reflects a consolidation which can only mean well for clients and customers alike. With the announcement of the proposed merger and possible ratification by the Central Bank of Nigeria (CBN), it is now established that customers of both banks are in for a good time.
Though the completion of the merger is subject to shareholders and regulatory approvals, stakeholders from both parties are saying that a collaboration between them will see a massive growth in the industry through a healthier and stronger competition, expanding the operations of both institutions while functioning as a single unit, increase efficiency and place Access Bank firmly in position as a dominant entity among its competitors. 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.
On the reason for the merger, according to Access Bank’s Group Managing Director/Chief Executive Officer, Herbert Wigwe, “Access Bank and Diamond Bank 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.”
From Wigwe’s submission, it appears 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 has not 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 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 merge with Diamond Bank seems to be a testament to its ambition to be a leading player in Africa and one to beat in the global space. The bank recognises 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.
Chief Executive of Diamond Bank, Uzoma Dozie, touched on the similarities of the banks’ vision and the role of people and technology in the next growth phase of both companies. He said, “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 one and tier two 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’s shareholders will receive a consideration of N3.13 per share, comprising 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 per cent to the closing market price of N0.87 per share of Diamond Bank on the Nigerian Stock Exchange (NSE) as of December 13, 2018, the date of the final binding offer.
If regulatory approvals are received by the bank’s stakeholders and the Securities and Exchange Commission (SEC), which recently signified 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.
Commenting on the development, one of the customers who said she has accounts with both banks, Barbara Onyeuka, spoke to Daily Sun. Her words: “I have accounts with both banks and just recently, I got a mail from Access Bank informing me about the merger. I don’t think I have any cause to worry because I am still able to use my apps and I have not noticed any major difference in their operations. For me, I think the merger is a step in the right direction. Diamond Bank didn’t get to that point where you start thinking they might fold up. Access Bank has been a very strong bank too. So, with this merger, I have more confidence banking with them that my money is in safe hands.”