Access Bank Obtains Regulatory Approval for N75b Rights Issue

By Dipo Olowookere

A regulatory approval has been obtained by Access Bank for its proposed raising of N75 billion ($207 million) through rights issue.

Access Bank, during its investor conference call on Wednesday, disclosed that the rights issue would be launched in the first half of 2019, mostly likely after the completion of its acquisition of Diamond Bank.

“Access Bank has historically maintained strong capital levels comfortably in excess of minimum regulatory requirements and is concluding a $250 million Tier II capital raise.

“Access Bank has also obtained regulatory approval to raise up to N75 billion (~$207 million) in a rights issue to be launched during H1 2019.

“This accelerates the capital management plan to support retail growth, set out in the Bank’s five year strategy,” the financial institution said during the call.

On Monday, Access Bank and Diamond Bank announce a merger that results in an enlarged Tier-1 Nigerian banking franchise and the largest bank in Africa by retail clients.

This followed the entry into a Memorandum of Agreement, approved by the Boards of both banks as announced on December 17, 2018, with both lenders receiving no objection from the Central Bank of Nigeria (CBN), the sector’s regulator.

According to details of the deal, Diamond Bank shareholders will receive N1.00 in cash for each share held in Diamond Bank and two Access Bank shares for every 7 shares held in Diamond Bank, implying pro-forma ownership structure in the combined entity of 81 percent for Access Bank shareholders and 19 percent for Diamond Bank shareholders.

The transaction combines Access Bank’s strong management team and risk management culture with Diamond Bank’s growing retail franchise, with potential for strong value creation for shareholders via extraction of financial synergies

The deal is expected to create a strong, safer financial institution with a diversified product offering and expanded distribution capabilities to provide clear benefits for customers, staff, and key stakeholders

In the pre-transaction completion, Diamond Bank is expected to undertake an impairment on its loan book pursuant to the implementation of IFRS 9, which is currently being evaluated and will be reflected in 2018YE numbers, while a Joint Implementation and Integration Committee was established to prepare and manage post-completion integration and strategic efforts.

In the dateline seen by Business Post, both parties will file for CBN approval of the merger in principle this month, while a clearance of scheme of merger from the Securities and Exchange Commission (SEC) is expected next month.

In March 2019, Access Bank and Diamond Bank look forward to having Court Ordered Meetings to seek shareholders’ approval, while the court sanction is projected for same month.

Both lenders hope to have the final approval of SEC and CBN between April and May 2019, while the transaction should be finalised before the end of June 2019.