By Adedapo Adesanya

Ratings agency, Moody’s, has placed the ratings of Bidvest Bank on review for downgrade, raising worries of Access Bank to properly fund the bank amid takeover plans.

Access Bank Plc, the banking subsidiary of Access Holdings Plc, entered into a binding agreement for the acquisition of 100 per cent equity stake in Bidvest Bank Limited in December.

The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.

However, in its new rating, Moody’s flagged the capacity of the Nigerian lender to fund the bank, in comparison with that of its owner, the Bidvest Group.

Bidvest, valued at R88 billion on the Johannesburg Stock Exchange (JSE) in December announced Access Bank as the preferred buyer of its banking unit, Bidvest Bank, in a deal worth R2.8 billion subject to the usual regulatory approvals.

The Bidvest Bank book, which mainly consists of leased assets, loans and advances, totalled R6 billion in December, funded by deposits of R8 billion.

Bidvest Bank generated a trading profit of R371 million and an operating income of R377 million in its most recent financial year.

After the finalisation of the acquisition, Bidvest Bank will be merged with Access Bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.

However, Moody’s has placed Bidvest Bank on review for downgrade to the following ratings: the Ba2 domestic-currency long-term issuer rating; the Aa2.za national scale domestic-currency long-term issuer rating; the P-1.za national scale short-term issuer rating; the ba3 Adjusted Baseline Credit Assessment (Adjusted BCA); and the b2 BCA.

The main reason for the potential downgrade is that Access Bank’s rating (long-term deposit ratings of Caa1 positive, Baseline Credit Assessment of caa1) is far lower than Bidvest Bank’s current rating (long-term Corporate Family Ratings of Ba2 stable).

Access Bank’s Caa1 rating is judged as poor quality and very high credit risk.

“The review for downgrade on the domestic-currency long-term issuer rating and the Adjusted BCA of Bidvest Bank will primarily focus on assessing the progress in the acquisition process, including the obtention of regulatory approvals, and the likelihood of the acquisition being completed,” said Moody’s.

“A successful completion of the acquisition by Access Bank could lead to a multi-notch downgrade of Bidvest Bank’s issuer rating due to the loss of two of the notches of parental support uplift from Bidvest Group.”

“This is because the potential new shareholder, Access Bank, has both a lower capacity than Bidvest Group to support the bank, as indicated by the lower rating of Access Bank in comparison to that of Bidvest Group; and a lower rating than Bidvest Bank itself.”

Moody’s said that Bidvest Bank’s current Ba2 domestic-currency long-term issuer rating benefits from two notches of uplift from its b2 BCA. This reflects the high chance of affiliate support from Bidvest Group if the need arises.

The Bidvest Group is expected to safeguard the bank’s financial health and operational stability despite the impending divestment.

The review for downgrade on the bank’s standalone BCA looks at the uncertainties regarding the future strategic direction of the bank post-disposal.

Moody’s said that this “includes the potential disruption to its activities during the disposal process as well as the bank’s post-acquisition financial fundamentals, which will depend on how it is combined with Access Bank’s existing South African operations.”

It added that the review will also assess whether the current positioning of Bidvest Bank’s b2 standalone BCA two notches above Access Bank’s caa1 standalone BCA would remain appropriate in case of successful completion of the acquisition.

Moody’s said a parent entity’s creditworthiness can directly and indirectly affect the credit standing of its bank subsidiaries.

“The bank’s b2 BCA reflects the bank’s solid capitalisation, high liquidity and improving profitability, underpinned by solid niche franchises in the fleet finance and management segment, as well as in the foreign exchange segment,” said Moody’s

“These strengths are moderated by the bank’s weak asset quality and relatively modest deposit-gathering franchise.”

“There is limited upside potential on the ratings given the review for downgrade.”

By Modupe Gbadeyanka

In its determination to help the government achieve a $1 trillion economy by 2030, the Central Bank of Nigeria (CBN) has introduced two account packages for Nigerians in the Diaspora.

The central bank tagged these account options as the Non-Resident Nigerian Ordinary Account (NRNOA) and the Non-Resident Nigerian Investment Account (NRNIA).

In a circular signed by its acting Director for Trade and Exchange Department, Dr W.J. Kanya, the apex bank stated that the NRNOA allows account holders to remit their foreign earnings to the country and manage funds in both foreign and local currencies, while the NRNIA gives them the opportunity to invest in assets in Nigeria in either foreign or local currencies.

It explained that account holders may maintain both a foreign currency account of a local currency account or both to carry out their transactions or partake in diverse investment opportunities.

It stated that Nigerians abroad will have the opportunity to won any of the accounts from January 1, 2025, subject to meeting KYC requirements.

The CBN said it came up with these account products to improve access for non-residents to opportunities in the Nigerian economy and increased contribution of Diaspora community to the socio-economic developments of Nigeria.

According to the circular, account holders can use their accounts to participate in the country’s Diaspora bond and other debt instruments issued locally, specifically targeted at the Nigerian Diaspora or available to the investing public.

It said the accounts would also serve as a conduit for them to manage their funds directly in a safe and secure environment and reduce the reliance on third parties in meeting local commitments and obligations.

By Adedapo Adesanya

Guaranty Trust Holding Company (GTCO) Plc recently completed the raising of N209 billion out of its targeted N400.5 billion public offer in the ongoing recapitalisation efforts directed by the Central Bank of Nigeria (CBN) to create resilient banks amid rising external shocks in the global environment.

Speaking on this development, the chief executive of the firm, Mr Segun Agbaje, said the equity capital raising has set a strong foundation for accelerated development.

“We extend our sincere appreciation to our new and existing shareholders, as well as the regulatory authorities, for their unwavering support during this initial phase of our equity capital raise.

“The strong participation and successful capital verification exercise and allotment process reaffirm the confidence investors have in our fundamentals and execution capabilities.

“This sets a solid foundation for accelerating our strategic roadmap, which aims to pivot the Group for transformational growth and unlock greater value across the Group’s Banking and Non-Banking businesses,” the banker stated.

GTCO had launched a public offer of 9.0 billion ordinary shares of 50 Kobo each at N44.5 per share, with N209.41 billion realized, representing 52.3 per cent of the total offer size.

The offer garnered substantial interest from domestic retail investors, raised a total of N209.41 billion from 130,617 valid applications for 4.706 billion ordinary shares, fully allotted.

“This milestone concludes the first phase of GTCO’s phased equity capital raise programme, which is structured on a balanced allocation strategy based on an equal split between institutional and retail investors. This balanced approach aligns with GTCO Plc’s commitment to fostering a well-diversified and robust investor base,” GTCO stated.

The announcement followed completion of the capital verification exercise conducted by the CBN and the approval of the basis of allotment of the offer by the Securities and Exchange Commission (SEC).