Access Bank acquires ailing Diamond Bank after 59% drop in profit

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Media reports indicate that Diamond Bank has been acquired by Access Bank Plc. The Cable reports that Diamond Bank’s Q3 2018 report had showed that the bank was under some financial stress with profit after tax falling from N3.9 billion in 2017 to N1.6 billion.

Founded by industrialist, Pascal Dozie, Diamond Bank has been besotted by a number of issues in the past two years, including a N250 million fine by the CBN and a slump in share value from N17 in 2017 to N7 in 2018.
According to TheCable, the acquisition was midwifed by the CBN in a bid to further consolidate the banking industry. An unnamed official of the bank has also said there was no need for the public to panic as “the bank is in safe hands”.

Denials

Both Access Bank and Diamond Bank had earlier denied reports of merger and acquisition talks in November. In a statement signed by the Company Secretary, Sunday Ekwochi, Access bank had said, ‘‘Our attention has been drawn to a newspaper report relating to Access Bank Plc being engaged in a merger and acquisition talks with Diamond Bank Plc. ‘‘We wish to notify the Nigerian Stock Exchange and the general public that the bank has not entered into any such discussion with Diamond Bank or any other institution.

‘‘As a publicly quoted company built on best practice, the bank is fully cognizant of its disclosure obligations in respect of any such corporate action and will always discharge its obligations in the most professional manner. ‘‘Consequently, any such statement regarding any such corporate action that is not issued by the bank should be disregarded’’

In a similar manner, Diamond Bank through its Head of Media, Mr Ezechimere Anyanwu, had stated: ‘‘The attention of Diamond Bank Plc has been drawn to the rumor in the media stating that the Bank is purportedly in discussions with Access Bank Plc to acquire the Bank. ‘‘We wish to state categorically that the Bank is not in discussions with any financial institution at the moment on any form of merger or acquisition.

‘‘We trust that the above clarifies the position of the Bank with regards to the rumor on the various media platforms’’.

A string of events leading to acquisition
According to media sources, Diamond Bank had last week, announced its decision to drop its international operating licence to focus on national operations following capitalisation issues.
Uzoma Dozie, the bank’s chief executive officer, had confirmed in a statement released on Friday that it would cease to operate as an international bank.

“The re-licensing as a national bank supports Diamond Bank’s objective of streamlining its operations to focus resources on the significant opportunities in the Nigerian retail banking market, and the economy as a whole,” he had said in a statement.

“The move follows Diamond Bank’s decision to sell its international operations, which included the disposal of its West African Subsidiary in 2017 and Diamond Bank UK, the sale of which is currently in its final stages.”

Besides the dropping of its international licence, Diamond Bank had also been fined by the Central Bank of Nigeria(CBN), for carrying out a number of illegal transactions for some corporate entities. These include allegedly aiding MTN Nigeria to illegally repatriate $8.1 billion, issuing three CCIs in favour of Dantata Investment for the sum of $5million without converting the foreign exchange received into Naira, and illegally remitting the sum of $352,222,358.39 on behalf of Standard Chartered Bank and Stanbic IBTC Bank in respect of the various CCIs issued to MTN.

In October 2018, Oluwaseyi Bickerseth, the bank’s chairman who was appointed in July, and three non-executive directors resigned.

“The directors are resigning for varied personal reasons, which will include focusing on their priorities. Diamond Bank will update the market with any further development in due course,” a notice signed by Uzoma Uja, the company secretary, read.
In November, S&P Global Ratings downgraded the bank’s rating to CCC+/C from ‘B-/B’ and its Nigeria national scale ratings to ‘ngBB-/ngB’ from ‘ngBBB-/ngA-3.

Perhaps the most significant of these was Diamond Bank ‘s Q3 2018 report which showed that the bank was under some financial stress with profit after tax falling from N3.9 billion in 2017 to N1.6 billion.

 

 

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