How Shareholders will Gain, Lose from Access, Diamond Bank Merger

Diamond Bank and Access Bank
Diamond Bank and Access Bank

Customers of both Access Bank Plc and Diamond Bank Plc express mixed feelings about the forth coming merger of the financial institutions

By Emeka Ejere

As Nigerians await the completion of the ongoing merger transaction between Access Bank Plc and Diamond Bank Plc, the debate on who the losers and gainers may be has continued to dominate discourse.

Stakeholders appear to be united in the belief that while shareholders of Diamond Bank have every reason to celebrate the business marriage, Access Bank shareholders see everything but gain.

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 N1.00 per share in cash and the allotment of two new Access Bank ordinary shares for every seven Diamond Bank ordinary shares held as at the implementation date.

The offer represents a premium of 260 per cent 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 bidding offer.

Diamond Bank on Monday, December 17, announced that it had been acquired by Access bank. The bank, in a statement, said the strategic decision would help it become the biggest retail bank on the African continent.

The board of the bank said it expects to conclude the transaction of its proposed merger with Access Bank Plc in the first half of 2019.

The bank said following a strategic review leading to a competitive process, the board had selected Access Bank as the preferred bidder with respect to a potential merger of the two banks that would create Nigeria and Africa’s largest retail bank by customer base.

According to Uzoma Dozie, chief executive officer of Diamond Bank, a  combination of Diamond Bank’s retail and digital leadership and the size of Access Bank’s balance sheet, corporate name and geographical reach coming from the proposed merger of the two financial institutions will be of immense benefit to customers and other shareholders.

It is more so as the two institutions are perfect complements with similar culture and customer-centric ethos, he added.

In a statement of update to the Diamond Bank customers last month, Dozie said, if concluded, the merger transaction will create Nigeria and Africa’s largest retail bank by customers, spanning three continents, 12 countries and 29 million clients.

“This is a hugely exciting opportunity and a positive development for all of Diamond Bank stakeholders, starting with our millions of valued customers,” he assured.

Similarly, Herbert Wigwe, chief executive officer of Access Bank said, “Access has a strong track record of acquisition and integration and has a clear growth strategy. Access and Diamond 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 has a strong financial profile with attractive returns and a robust capital position with 20.1 per cent CAR as at 30 September 2018.

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

“I think the merger is the best thing that can happen to the shareholders of Diamond Bank, considering the huge loss they would have suffered were the bank acquired by AMCON or nationalised like in the case of Keystone Bank, Boniface Okezie, president, Progressive Shareholders Association told Realnews in a telephone interview.

He said AMCON takes over banks that run into problem and the shareholders (especially minority shareholders) bear the brunt.

“The marriage, for me, is the best arrangement. I believe Access Bank with their business acumen, will make sure shareholders get good returns on their investments,” Okezie further said.

Okezie, who holds the shares of the two banks, revealed that most of the affected investors also have shares of the two banks, and so have nothing to panic about.

Also, Bisi Bakare, leader of Pragmatic Shareholders Association, said while the merger will clearly benefit Diamond Bank shareholders, it is not a thing to celebrate for the Access Bank counterparts.

She believes that Diamond Bank shareholders will through the merger enjoy a higher share price of Access Bank and a better return on investment as Access Bank pays dividend twice a year.

On the other hand, Bakare regretted that Access Bank shareholders will suffer share dilution which will arise from more shareholders coming from the merger.

“Assuming Access Bank pays N1 dividend 1000 shareholders, when the shareholders suddenly rise to 1,500 it may not be able to pay them N1,” she further explained.

“However, up to 50 percent of the affected investors, like me, have shares in the two banks, so what they lose from one, they gain from the other,” Bakare added.

She urged the Central Bank of Nigeria, CBN, and the Security and Exchange Commission, SEC, to sit up in their regulatory functions, pointing out that before a bank gets to the stage Diamond Bank got to, the regulators ought to have done something.

On the side of the customers, Patrick Obinna, a savings account holder with Diamond Bank, feels that merger or acquisition is better than allowing the bank to go distressed.

However, Anayo Ezugwu, another savings account holder with Diamond Bank, is worried about what he called excessive charges by Access Bank. He is considering opening account with another bank with bearable charges.

However, an Access Bank advertorial published on some national dailies reads in part: “Have you ever had to withdraw less than initially planned because of ATM charges on withdrawals from other banks?

“How does it feel to know that this is less likely to happen if you are an Access Bank or Diamond Bank customer?

“What this means is that Access Bank and Diamond Bank customers will have access to over 3,100 ATMs within the country free of charge.”

On what the customers of Diamond Bank stand to gain from the merger, Chioma Afe, head of Corporate Affairs, Diamond Bank, said the bank’s customers would now enjoy wider banking base, use ATM machines of both banks free of charge and still have the lofty products of Diamond Bank such as Diamond Extra available to them.

Abdul Umoyo, head of corporate affairs, Access Bank,  is also optimistic that customers of the two banks will be the ultimate winners from   the merger.

– Jan. 11, 2019 @ 17:30 GMT |

(Visited 68 times, 1 visits today)