ACCESS BANK AND DIAMOND BANK MERGER.
Access bank is one of the largest financial service provider, owned by the Access Bank Group. It received its licence from the Central Bank of Nigeria in 1989 and was listed on the Nigeria Stock Exchange in 1992. Diamond bank which also provides banking and financial services was founded by Pascal G. Dozie in December 20,1998
Access bank entered into a merger agreement with Diamond bank in December 2018 with a target to complete the merger in the first half of 2019 while awaiting regulatory approval and procedures. It was fully merged on April 1st 2019 retaining the name of Access bank with a logo of Diamond bank.
History has shown that Access bank isn’t new to merger. In 2005, it acquired Marina and Capital banks. In 2008, it acquired 88% shares of Omnifinance bank. In 2011/2012, it acquired about 75% shares of intercontinental bank. With Access bank merging and acquiring shares of various company, its quite shocking why the next option is Diamond bank.s
Diamond bank has a debt of $200 million Eurobond which is expected to mature this year. It also has a $51 million International Finance Corporation loan. It has to sell off some of its UK and south Africa assets making it a national bank, leaving the international bank system. Also, in November, 2018, Diamond bank lost its stock value on the Nigeria stock exchange. To survive therefore, they need more equity; Hence, the merger. According to Diamond bank, Access bank will acquire the entire issued share capital of diamond bank in exchange for combination of cash and shares in Access bank. With the merger, both institutions expect to combine their distinct potentials to build a stronger bank.
Some view this merger to be beneficial to both companies as it will increase the market share which will help the firm have economies of scale and become more profitable. It will also increase the company asset portfolio as it will be the largest retail bank in Africa which will help it compete internationally. Also, combined with Diamond’s bank strong leadership in digital and mobile-led retail banking and Access bank being one of Nigeria’s leading full commercial bank will help to accelerate growth of the merged company.
On the other hand, this might be a disadvantage to both institutions as there is a likelihood of a reduction in labour force in both organizations. It would also increase the debt profile of the merged company despite the increase in the company’s asset portfolio. The cultural and general integration issues of the different companies also pose a challenge.
However, both companies seem to be happy about the development as Diamond’s Board of Directors believes that the merger is in the best interest of all stakeholders and Access bank believes that the new company will be a significant corporate and retail bank in Nigeria. Sadly, Diamond bank will cease to exist under the Nigeria law.
By Oladele Abigail
Oladele Abigail, an economics student of Bowen University who applies her passion for writing to her career path.
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