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Access Bank, Diamond Bank Merger to Create Africa’s Biggest Bank



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A planned merger between Access Bank and Diamond Bank is set to form the largest banking group in Nigeria and Africa by number of customers according to the two lenders.


Global Finance, a monthly magazine founded in 1987 and which shares global news and insight for corporate financial professionals said that the new entity is expected to have a presence in three continents and 12 countries with 29 million customers, 3,100 ATMs and nearly 32,000 PoS terminals.


Access and Diamond announced in a joint statement on December 19, 2018 that the merger is expected to be completed in the first half of 2019, subject to shareholder and regulatory approval.


The regulators who must give their nods to the merger are the Central Bank of Nigeria (CBN), Securities and Exchange Commission, Nigerian Stock Exchange, and a Federal High Court. Already, CBN has registered “No Objection” to the proposal, the banks said.


The transaction is complementary according to the two lenders. Diamond is expected to benefit from Access Bank’s strong culture of risk and capital management expertise and a clear strategy for sustainable growth while Access will take advantage of Diamond Bank’s unique retail banking expertise and strong digital offering.


“It is a transformative decision for Access, which will be the surviving name after the transaction,” said Pabina Yinkere, chief investment officer at Sigma Pensions in Lagos.


“What you will have is a strong bank on retail banking and corporate banking. The group also has the capital to withstand the capital adequacy ratio challenge in the banking industry.” The new bank will have a CAR of 20% at the bank level and 22% at the group level, the two lenders explained.


Access valued Diamond Bank at about 72.5 billion naira (about $200 million) and Diamond Bank shareholders will receive 3.13 naira per share in cash and shares.


Access Bank said it had also received a “No Objection” from the CBN to carry out a Rights Issue to raise 75 billion naira (about $207 million) in the first half of the year, subject to shareholder and regulatory approvals.


Nigeria’s banking industry is a motley of a few big banks sandwiched with small, weak ones, some of which carry high levels of nonperforming loans (NPLs). Diamond is one of those said to be carrying a significant amount of large NPLs.

These bad debt challenges in the industry arose mainly from the banks’ exposure to the Nigerian oil industry. When global oil prices spiked after 2008, banks funded several oil industry projects.


When oil prices fell shaprly in 2014, some banks were suddenly saddled with bad loans and lacked the capacity to write them off. Other banks with less exposure to the oil industry remained strong. The central bank has said that the NPL ratio in the industry remains below 10%, and therefore poses no systemic risk to the industry.


Yet the announcement of this merger came three months after another bank—Skye—was taken over by CBN and sold to new investors who changed its name to Polaris Bank. CBN said the action followed Skye’s inability to meet minimum thresholds in critical prudential and adequacy ratios.


Classification by the central bank shows that five banks—Access Bank, First Bank Nigeria, Guaranty Trust Bank, United Bank for Africa, and Zenith Bank— form tier-1 lenders, while the 16 others are in the tier-2 category.


Yinkere expects this Access-Diamond merger to lead to further concentration in the local banking industry. Before now, the top five banks controlled over 60% of the industry’s assets and with this merger, this concentration will increase further. Diamond is the largest tier-two lender, according to him.

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CBN Gives 3 New Banks Nod to Start Operations



Godwin Emefiele, Governor of the Central Bank of Nigeria
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Central Bank of Nigeria (CBN) has confirmed the licensing of three new banks by adding them under different lists published on its website.


The new operators are Titan Trust Bank Limited, TAJ Bank Limited and Globus Bank Limited.


Though Titan Trust Bank Limited and Globus Bank Limited started operations earlier, the addition to the list of  Deposit Money Banks (DMBs) and financial holding companies operating as on July 23, 2019, by the CBN has cleared every speculation.


The list also indicates that the regulator has issued a Non-Interest Banking license with regional authorisation to TAJ Bank Limited. While two of the newly licensed banks will operate as commercial lenders, the third one, TAJ Bank Limited was licensed to operate as a non-interest bank.


Before the banking reform of 2005, instituted by ex-governor of the CBN, Charles Soludo, Nigeria has as many as 89 banks operating as commercial and merchant banks. With the reform, which hiked minimum capital base to N25 billion from N2 billion, the number reduced to 24 universal banks.


However, subsequent alignment and take over by the regulators led to further consolidation in the operations of the banks, leading to a downward reduction in the number of operators.


The newly licensed TAJ Bank Limited has joined Jaiz Bank as only two operating as non-interest banks in the country.


Though details of the newly licensed lenders are still scanty, industry watchers revealed that Titan Trust Bank has as its Chairman, a former Deputy Governor of the Central Bank of Nigeria (CBN), Mr Tunde O. Lemo, and Mr Mudassir Amray as Managing Director and Chief Executive Officer (MD/CEO).


Titan trust bank was established in 2018 but officially obtained its license in April 2019 as a national bank and started operations. The Executive director is Adaeze Udensi. The bank’s operations include Small and medium-scale enterprises (SME) banking, Digital banking and Commercial banking


Also, Globus bank limited obtained its regional banking license in 2019 and begun operations on May 2, 2019.


Available records show that the executive director of Globus Bank Limited is Elias Igbinakenzua. Igbinakenzua has had stints as an Executive Director of Zenith Bank and Access Bank respectively

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NDIC Pays N593.8m to Shareholders of Banks In-liquidation



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Nigeria Deposit Insurance Corporation (NDIC) on Tuesday revealed that it paid the sum of N593.78 million to shareholders of some banks in-liquidation in 2018.


NDIC said this amount was paid to 48 shareholders of the affected lenders.


“The NDIC paid the sum of N593.78 million to 48 shareholders of Alpha Merchant Bank, Rims Merchant Bank and Continental Merchant Bank in 2018,” the report titled NDIC 2018 Annual Report.


It stated that the cumulative liquidation dividend paid amounted to N3.30 billion to 679 shareholders of six Deposit Money Banks (DMBs) in-liquidation as at December 31, 2018 against N2.71 billion paid to 631 shareholders of DMBs in-liquidation as at December 31, 2017.


“However, the total liquidation dividend declared for shareholders of DMBs-in-liquidation stood at N4.04 billion as at December 31, 2018,” the report added.


The NDIC further said in the report that during the year, it paid the sum of N1.52 billion to uninsured depositors of 20 DMBs in-liquidation.


In total, the agency said it has paid the sum of N100.39 billion as liquidation dividend to uninsured depositors of closed DMBs as at December 31, 2018.


The report stated that through sustained and diligent liquidation activities, the NDIC has realized assets to fully pay the deposits of the customers of 17 out of the 49 DMBs in-liquidation.


“In effect, all the depositors of the 17 defunct banks who came forward to file their claims have been paid all their monies (both insured and uninsured) that were erstwhile trapped in such banks,” it said.


On the asset management activities in the year under review, the NDIC said it ensured the efficient conversion of assets of closed financial institutions to cash for the payment of liquidation dividend to uninsured depositors, creditors and shareholders.


“Overall, the NDIC realised the sum of N777.03 million from the disposal of risk assets, physical assets and investments for the DMBs, MFBs and PMBs in-liquidation during the year ended December 31, 2018,” it added.


Commenting on the major challenges faced in asset management activities in 2018, the agency said they were majorly inadequate documentation of borrowers’ information by failed banks; unwilling attitude of high net-worth debtors of failed banks to liquidate their debts; preponderance of uncollateralised loans; problems associated with identifying assets of judgment debtors; protracted legal processes due to frequent adjournment of cases; large outstanding insider-related debts usually characterised by poor documentation and insider abuse; and difficulties to repay loans induced by economic realities, policy inconsistencies as well as issues relating to moral hazards.


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Ecobank Takes Over Shoreline Power Company over N4.6Bn Debt



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Taiwo Ogbara, a receiver-manager appointed by Ecobank Nigeria Limited, has been empowered by a Federal High Court sitting in Lagos to have unrestricted access to one of the debtors of the financial institution, Shoreline Power Company Limited, into its premises.


The power firm was said to owe the lender about N4.6 billion and that when the bank appointed a receiver to take over the company, it resisted, which prompted a court action and Justice Chuka Obiozor restrained the firm’s management, including Orikolade Karim, Tunde Karim, Yinka Karim, Marc Hasenclever and Graeme Stout, from interfering with or obstructing Mr Ogbara in the course of his duties as receiver-manager, pending the hearing and determination of the motion on notice.


According to reports, the judge granted an order of interim injunction restraining the defendants or their agents from tampering with or disposing of the firm’s assets and properties covered by a Deed of All Assets Debenture of March 18, 2013 between Ecobank and Shoreline Power Company, registered at the Corporate Affairs Commission (CAC).


In his ruling, Justice Obiozor directed the Inspector-General of Police (IGP) and his officers and men to assist the receiver-manager in carrying out his duties over the firm’s properties and equipment and further granted an order of interim mareva injunction restraining all Nigerian banks from accepting or honouring any mandate or cheques presented by the defendants for the withdrawal of any sum kept in Shoreline Power Company’s account, pending hearing of the motion on notice.


The banks were also directed to file the company’s statements of account with them within 48 hours and to transfer such funds into a receivership account as may be requested by the receiver-manager.

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