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Diamond Bank, Access Bank Merger and the Big Obstacle

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By Dipo Olowookere

One news item that has dominated the capital market space in Nigeria at the moment is the merger between Diamond Bank and Access Bank.

The merger between both parties was confirmed yesterday after initial denials by both banks, while the deal is expected to be finalised before the end of June 30, 2019.

It is important to note that both financial institutions are trading their equities on the floor of the Nigerian Stock Exchange (NSE).

In a release on Monday by Diamond Bank, its board said, “Based on the agreement reached by the boards of the two financial institutions, Diamond Bank shareholders will receive a consideration of N3.13 per share, comprising of N1.00 per share in cash and the allotment of 2 new Access Bank ordinary shares for every 7 Diamond Bank ordinary shares held as at the Implementation Date.

“The offer represents a premium of 260 percent to the closing market price of N0.87 per share of Diamond Bank on the Nigerian Stock Exchange as of December 13, 2018, the date of the final binding offer.”

This deal, according to the Chief Executive Officer of Diamond Bank, Mr Uzoma Dozie, “will create one of Africa’s leading financial institutions.”

Mr Dozie said, “There is clear strategic rationale for the proposed merger and strong complementarities between the two institutions,” noting that, “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.”

He further said, “The board of Diamond Bank believes that the proposed combination of the two operations provides an exciting prospect for all stakeholders in both businesses and will create a financial institution with the scale, strength and expertise to capitalise on the significant opportunities in Nigeria and sub-Saharan Africa more broadly.”

For the CEO of Access Bank, Mr Herbert Wigwe, “Access Bank has a strong track record of acquisition and integration and has a clear growth strategy.

“Access Bank and Diamond Bank have complementary operations and similar values, and a merger with Diamond Bank, 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.

“Access Bank has a strong financial profile with attractive returns and a robust capital position with 20.1 percent CAR as at September 30, 2018.

“We believe that this platform, together with the two banks’ shared focus on innovation, financial inclusion and sustainability, can bring benefits to Access Bank and Diamond Bank customers, staff and shareholders.”

While the Central Bank of Nigeria (CBN) is believed to have midwifed this transaction, both shareholders of Access Bank and Diamond Bank will still have to approve the merger, which some have described as acquisition in reality.

However, Business Post analysts are of the view that shareholders of Diamond Bank will want to create a big obstacle to this merger, especially Carlyle Group, an American equity firm, which in 2014 became the leading individual shareholder in the bank with the acquisition of 17.7 percent of the company’s shares. At that time, the US-based company acquired 4.16 billion shares of Diamond Bank at N5.80k each.

While some minority shareholders may not reject the offering because of what Access Bank is putting forward, Carlyle Group, which has been speculated to have called for the resignation of Mr Dozie, may become the biggest hurdle to cross in making the merger see the light of the day.

In our November 27, 2018 article, we highlighted how Carlyle Group may have lost over N20 billion of their investment in Diamond Bank since they joined the lender.

As it has been reported in some sections of the media, the Pascal Dozie family, founder of Diamond Bank, had allegedly first obtained a loan from GTBank Plc, which was later allegedly taken over by Access Bank Plc.

The loan was said to have been used to chase foreign investors out of the bank, especially, Actis, in 2014, which allegedly sold their shares to the Dozie family at N7.50k per unit, receiving over $125 million from the deal.

Business Post gathered from a statement released then that the Dozie family, through Kunoch Holdings, had acquired the 14.8 percent stake of Actis DB Holdings Limited in Diamond Bank. Actis had invested heavily in Diamond Bank in 2007, when it bought the bank’s shares.

With the above, it is anticipated that Carlyle Group might feel cheated in the Access Bank/Diamond Bank deal and might want to fight back by frustrating it, especially when it has been speculated that the Dozie family are favouring Access Bank to take over Diamond Bank allegedly as pay back for the loan they allegedly obtained some year ago to pursue Actis out of the company.

Also from a leaked letter purportedly written by a former Chairman of Diamond Bank, Mr Seyi Bickerstheth, which was later leaked to the media, Carlyle Group has not been in support of this transaction and the leadership of Mr Dozie.

Mr Bickerstheth, who resigned from the bank over a month ago alongside three other non-executive directors, claimed Carlyle Group had wanted a situation where fresh capital would be injected into Diamond Bank for recapitalisation instead of handing over the bank to Access Bank on a platter of gold.

According to letter, the group had insisted that for the cash injection to happen, Mr Dozie will first have to relinquish his position as the CEO.

“After several discussions, the CEO, of the bank who is also a representative of the second largest shareholder Kunoch Ltd, agreed to resign effective January 3, 2019 but would not tender his letter to confirm his verbal notification.

“In response, the representative of CSSAF DBN Holdings therefore at the board meeting held on October 18, 2018 put forward a motion for the removal of the CEO with immediate effect. This was despite continuous negotiations and attempts by members of the board, to provide an amicable solution to this impending shareholder fight and reaching several tentative agreements, which were frustrated by both parties.

“Nonetheless due to technical reasons and reluctance of board members regarding an immediate removal of the CEO, the vote for the removal of the CEO was postponed, pending legal clarifications, which could not be provided by the Company Secretary,” the letter had said.

It had said further that, “The CEO, at the October 18 2018 meeting, had a financial adviser appointed by the executive management without reference to the board to present to the board various strategic options for recapitalization either through an internal rights issue or possible merger with other Tier 1 banks.

“While the board stated that this was to have been presented to the board capital raising committee, it allowed the presentation to be made. The presentation, though based on 2017 financials was still very high level and, was well received by the board and the board directed that the recommendation be passed on to the capital raising committee of the bank to evaluate this along with all other options being considered – new injection of capital by the shareholders, merger with a local bank or position to partner with an international bank not currently operating in Nigeria

“On Friday October 19, 2018, due to the lack of clarity on the motion for immediate removal of the CEO, the representative of CSSAF DBN Holdings informed board members that as a majority shareholder CSSAF DBN Holdings would call for an Extraordinary General Meeting to remove the CEO since the board had not voted on the matter.

“The 4 NEDs then decided that it was becoming a shareholder fight, which they felt could have been averted either by the CEO tendering a letter indicating his resignation effective January 3, 2019 or by CSSAF DBN Holdings accepting to give the Board the responsibility of ensuring the issue is resolved amicably. Purely on this basis, the 4 NEDs wrote to resign their appointments immediately by emails to the Company Secretary to allow the 2 shareholders resolve the impasse.”

If you desire to read the full letter, kindly click HERE For now, what observers are not sure of is if Carlyle Group will approve the merger between Diamond Bank and Access Bank or would want to first force Access Bank to settle their over N20 billion loss before giving the deal its nod.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via [email protected]

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Access Bank Opens Branch in Malta to Strengthen Europe-Africa Trade Ties

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Musicians Access Bank Opebi

By Modupe Gbadeyanka

To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.

It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.

Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).

Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.

Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.

This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.

It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.

“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.

“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.

“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).

“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.

Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”

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Goldman Sachs, IFC Partner Zenith Bank, Stanbic IBTC, Others to Empower Women Entrepreneurs

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Zenith Bank $500m Eurobond

By Adedapo Adesanya

The International Finance Corporation (IFC) and Goldman Sachs have announced a new partnership with African banks, including Nigeria’s Zenith Bank and Stanbic IBTC Nigeria to support the Goldman Sachs 10,000 Women initiative, a joint programme launched in 2008 to provide access to capital and training for women entrepreneurs globally.

The two Nigerian banks are part of nine financial institutions from across Africa which have agreed to join the 10,000 Women initiative committing to leverage the business education and skills tools the programme provides to create more opportunities for women entrepreneurs across the continent by providing access to business education.

Others banks include Stanbic Bank Kenya, Ecobank Kenya, Ecobank Cote d’Ivoire, Equity Bank Group, Banco Millenium Atlantico – Angola, Baobab Group, and Orange Bank.

Speaking on this, Ms Charlotte Keenan, Managing Director at Goldman Sachs said – “10,000 Women has had a powerful impact to date, but we know that there are more women to reach and more potential to be realized.

“We are delighted to partner with IFC to supercharge the growth of women-owned businesses across Africa, and mainstream lending to female business leaders. We remain committed to supporting entrepreneurs with the access to education and capital that they need to scale.”

Since 2008, the 10,000 Women initiative has provided access to capital and business training to more than 200,000 women in 150 countries.

“This expanded initiative marks a significant step forward in creating equitable economic opportunities for women in Africa, enabling them to build stronger, more resilient businesses and to realize their entrepreneurial goals,” said Ms Nathalie Kouassi Akon, IFC’s Global Director for Gender and Economic Inclusion.

Goldman Sachs’ 10,000 Women initiative complements the Women Entrepreneurs Opportunity Facility (WEOF), launched in 2014 by Goldman Sachs and IFC as the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs in emerging markets.

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Development Bank of Nigeria Wins Financial Inclusion Leadership Award

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Development Bank of Nigeria

By Aduragbemi Omiyale

In recognition of its unwavering commitment to fostering access to financing for Nigerian micro, small and medium enterprises (MSMEs), Development Bank of Nigeria Plc has been rewarded with the Financial Inclusion Leadership Award at the Champions of Inclusion Nigeria Financial Inclusion Awards.

This was at the 2024 International Financial Inclusion Conference (IFIC) organised by the Central Bank of Nigeria (CBN) in collaboration with the World Bank and other stakeholders.

The chief executive of the lender, Mr Tony Okpanachi, said the recognition affirms the company’s efforts in expanding access to financial services for MSMEs in Nigeria.

“We are honoured to receive the Financial Inclusion Leadership Award, which is a testament to our bank’s commitment to expanding access to financial services for all Nigerians. This award recognises our efforts to bridge the financial inclusion gap, particularly for a priority sector like the MSMEs.

“Additionally, this award is a validation of our strategic focus on driving financial inclusion for small businesses, and we are proud to be at the forefront of this initiative that drives that. We will continue to innovate and expand our financial inclusion programmes, ensuring that more Nigerian small and startup businesses have access to services,” he stated.

On his part, the Chief Operating Officer of DBN, Mr Bonaventure Okhaimo, said the accolade demonstrates the firm’s dedication to driving financial inclusion and economic growth in Nigeria.

“This award acknowledges our Bank’s innovative approach to widening opportunities for MSMEs in Nigeria to grow and scale their businesses,” he said.

“This award will motivate us to continue pushing the boundaries of financial inclusion, exploring more innovative solutions and partnerships to expand our reach and impact.

“We are committed to ensuring that more small businesses and startup enterprises in Nigeria have access to financial services, this award will further inspire us to accelerate our efforts in this regard,” he stated.

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