We have enough cap­i­tal for merger with Di­a­mond Bank says Wigwe, Ac­cess Bank CEO

Business a.m. - - COMPANY -

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.


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