We have enough capital for merger with Diamond Bank says Wigwe, Access Bank CEO
HER BERT WIGWE, THE MANAGING director of Access Bank has said Access Bank has enough capacity to consummate a merger with Diamond Bank without additional capital.
Wigwe was speaking to concerns surrounding the IFRS9 implications of the impairments associated with Diamond Bank’s loan book.
Access Bank revealed it had concluded an arrangement with partners to raise tier 2 capital and plans a rights issue for the latter part of 2019.
Wigwe, however, said the decision to raise additional capital is to align with international best practices and create additional capital buffers to ensure the new institution being created will be robust not just in terms of size but have adequate capital to support it.
He explained that the proforma capital position of the merged bank will be in full compliance with regulatory requirements for significant financial institutions with an international banking presence.
However, “in order to meet international standards of best practice and ensure a robust capital buffer, Access Bank and Diamond Bank have jointly agreed on a strategic capital management plan and expect to achieve a post-completion Capital Adequacy Ratio (“CAR”) of 20 percent at the Bank level and 22 percent at the Group level,” the bank executive said.
Diamond Bank is also expected to take further impairments in line with IFRS9, to be reflected in year-end 2018 results. This is just as Access Bank said it has already finalised terms and obtained regulatory approvals for a Tier II capital issuance, which will raise $250 million, available for drawdown in January 2019.
The rights issue to raise up to N75 billion ($207 million) in H1 2019 is however subject to shareholder approvals and other regulatory approvals.
A successful issuance will accelerate the capital management plan to support retail growth, previously set out in Access Bank’s five-year strategy, explained Wigwe.