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The Chief Executive Officer, Access Bank Plc, Mr Herbert Wigwe, in this interview, spoke on a lot of issues surrounding the proposed merger between Access Bank and Diamond Bank Plc as well as the benefits of the merger to the shareholders, customers and banking industry among others. Excerpts:
WHAT prompted Access Bank to a merger with Diamond Bank?
It (the merger) followed the signing of the Memorandum of Agreement and announcement of headline terms. In the memorandum of agreement to get into a merger with Diamond Bank, we believe that the combined enterprise will be a large diversified bank with an extreme extensive retail foot print. Together we will have 27 million customers which is basically the largest customer base of any bank in the continent, about 33,000 Point of Sale, PoS, terminals, and 3,000 Automated Teller Machines, ATMs, as well as 13 million mobile customers.

CEO, Access Bank, Herbert Wigwe
The reason for this background is for people to understand the nature of the institution that is being created. We have agreed for the price of N3.13, out of which N1.00 will be paid in cash and N2.13 will be done by way of shares.
What is the objective of the transaction?
Access Bank has grown over time and built a very strong possession of bargain capability. Also the bank has shown significant expertise in corporate, treasury and risk management.
Retail business
We created and pushed a very strong value-chain strategy which was our own way of building our retail business; we realized that a large diversified bank is critical not just to the taste of Nigerians but in Africa and world over.
Our partner, Diamond Bank, is unparalleled as far as digital banking is concerned and retail banking. The bank has shown that even as from retail start point will compete with any institution as far as the size of retail banking is concerned in the country. The institution brings in 17 million customers to a very strong financial inclusion and capability, stronger than most banks and as well as its relationship with some of the strong telecom companies.
On our own part, Access Bank is bringing in a very strong capability as far as merger and acquisition are concerned and this is not the first, second or third merger we have done. These transactions are extremely complex and require a lot of institutional history and memory.
What are the benefits of this merger?
One of the benefits we have in this combination is that having done this several times before, we have learned from the mistakes of the past. Integrating Diamond Bank is going to be a lot better than all the other ones we have done in the past. The latest one we did was the Intercontinental Bank transaction, which was a large one and basically gave us all the learning points that we needed to bring to bear as far as this one is concerned.
Largest bank in Africa
The merger will form a leading Tier-1 Nigerian bank and the largest bank in Africa by number of customers, spanning three continents, 12 countries and 29 million clients. It will bring together treasury, risk management and corporate banking expertise with strong retail and digital banking capabilities to create a financial institution operating across the full suite of products for all customer segments.
Does Access Bank have adequate capital to consummate the merger?
Access Bank has enough capacity to consummate this merger without additional capital, but we have also taken new step in line with international best practice, and the need to create a capital buffer that the new institution being created is one that will be robust not just in terms of size, but adequate capital to support it going into the future.
We have concluded with some of our partners to raise tier two capital that will be ready before the end of January 2019, about $250 million dollars.
We also have the Rights Issue of about $200 million additional which is N75 billion. We will soon be calling an Extraordinary General Meeting, EGM, for shareholders to support our capital raise. That cannot happen now, but sometime next year before the end of the second half. The reason is to make sure that even though we have more than enough capital today, the emergent entity will have the strongest capital base to support an entity of that nature.
Are you going to downsize staff as it happened with Intercontinental Bank?
I think it is important to speak to the issue of staff, because it is a topical issue. First of all, it will be inappropriate to compare Diamond Bank with Intercontinental. Intercontinental Bank was a CBN intervened bank for two years, before they opened it up to a process. Diamond Bank is a going concern. Diamond Bank has a very active customer base. Diamond has some of the very best people in the industry.
What we are seeing here is a combination of our talent pool which we are putting together to support this large enterprise. Within Access Bank, we have seen the need for some succession plan, even as we go on. What this means is that every staff is accommodated.
Secondly, the compelling proposition around this is that Diamond Bank has strong retail capability. The idea cannot be to ask people to start going, because once you do that the first thing you are going to do is to lose your customers.
Can you explain more on this transaction; is this arrangement a merger or acquisition?
This is a merger executed technically through a scheme of arrangement in respect of which one party is issuing shares for the other. Regulators have given a no objection to this merger.
Notifications had been sent to all regulatory agencies. This thing broke on Sunday. We have since sent our notifications to all the regulatory agencies. The primary agency is the Central Bank of Nigeria, CBN, which has given us a ‘no objection’ letter. We have notified the Securities and Exchange Commission, SEC, The National Pension Commission, PenCom, and the Nigeria Stock Exchange, NSE.
Also the transaction would be concluded through a Scheme of Merger following Access Bank and Diamond Bank Court Ordered Meetings expected in March 2019 to approve the terms. Subject to shareholder approvals, final SEC, CBN, and PenCom regulatory approvals and Federal High Court, FHC sanction expected before end of first half, 2019 (H1’19) .
The cost synergies conservatively estimated at N30 billion per annum, pre-tax, to be fully realised within three years post-completion. Further revenue and balance sheet synergies to be evaluated by joint implementation committee.
What about the loan book of Diamond Bank, who is going to be responsible for the bad debts?
We have enough capital such that after Diamond Bank has written off its bad loans, the new and larger enterprise can continue.
Larger enterprise
Because we are doing the Tier-2 capital raising, we are even increasing and creating even much more capital cover. The new enterprise as large as it may be will be adequately capitalised.
What would be the fate of shareholders in the merged entity?
Shareholders are key. We are doing this to create value for shareholders. Ultimately when value is created, the main beneficiaries will be the shareholders. This transaction will be value accretive from the first year of legal merge. Internationally, mergers happen, if partners see that they can create a bigger entity.
Given the enlarged entity as a result of the merger, can Access Bank maintain its tradition of dividend payment?
The bank would maintain its dividend tradition. It is a commitment, which as management, we take fully into account. We realise we have different types of shareholders. There are some who the income is extremely important to, because that is what they sustain themselves with. We are not going to be irresponsible. Post-merger, we will still do as we have done up to date. We will pay dividends. We will continue to pay interim and full year dividends. (Vanguard)
WHAT prompted Access Bank to a merger with Diamond Bank?
It (the merger) followed the signing of the Memorandum of Agreement and announcement of headline terms. In the memorandum of agreement to get into a merger with Diamond Bank, we believe that the combined enterprise will be a large diversified bank with an extreme extensive retail foot print. Together we will have 27 million customers which is basically the largest customer base of any bank in the continent, about 33,000 Point of Sale, PoS, terminals, and 3,000 Automated Teller Machines, ATMs, as well as 13 million mobile customers.

CEO, Access Bank, Herbert Wigwe
The reason for this background is for people to understand the nature of the institution that is being created. We have agreed for the price of N3.13, out of which N1.00 will be paid in cash and N2.13 will be done by way of shares.
What is the objective of the transaction?
Access Bank has grown over time and built a very strong possession of bargain capability. Also the bank has shown significant expertise in corporate, treasury and risk management.
Retail business
We created and pushed a very strong value-chain strategy which was our own way of building our retail business; we realized that a large diversified bank is critical not just to the taste of Nigerians but in Africa and world over.
Our partner, Diamond Bank, is unparalleled as far as digital banking is concerned and retail banking. The bank has shown that even as from retail start point will compete with any institution as far as the size of retail banking is concerned in the country. The institution brings in 17 million customers to a very strong financial inclusion and capability, stronger than most banks and as well as its relationship with some of the strong telecom companies.
On our own part, Access Bank is bringing in a very strong capability as far as merger and acquisition are concerned and this is not the first, second or third merger we have done. These transactions are extremely complex and require a lot of institutional history and memory.
What are the benefits of this merger?
One of the benefits we have in this combination is that having done this several times before, we have learned from the mistakes of the past. Integrating Diamond Bank is going to be a lot better than all the other ones we have done in the past. The latest one we did was the Intercontinental Bank transaction, which was a large one and basically gave us all the learning points that we needed to bring to bear as far as this one is concerned.
Largest bank in Africa
The merger will form a leading Tier-1 Nigerian bank and the largest bank in Africa by number of customers, spanning three continents, 12 countries and 29 million clients. It will bring together treasury, risk management and corporate banking expertise with strong retail and digital banking capabilities to create a financial institution operating across the full suite of products for all customer segments.
Does Access Bank have adequate capital to consummate the merger?
Access Bank has enough capacity to consummate this merger without additional capital, but we have also taken new step in line with international best practice, and the need to create a capital buffer that the new institution being created is one that will be robust not just in terms of size, but adequate capital to support it going into the future.
We have concluded with some of our partners to raise tier two capital that will be ready before the end of January 2019, about $250 million dollars.
We also have the Rights Issue of about $200 million additional which is N75 billion. We will soon be calling an Extraordinary General Meeting, EGM, for shareholders to support our capital raise. That cannot happen now, but sometime next year before the end of the second half. The reason is to make sure that even though we have more than enough capital today, the emergent entity will have the strongest capital base to support an entity of that nature.
Are you going to downsize staff as it happened with Intercontinental Bank?
I think it is important to speak to the issue of staff, because it is a topical issue. First of all, it will be inappropriate to compare Diamond Bank with Intercontinental. Intercontinental Bank was a CBN intervened bank for two years, before they opened it up to a process. Diamond Bank is a going concern. Diamond Bank has a very active customer base. Diamond has some of the very best people in the industry.
What we are seeing here is a combination of our talent pool which we are putting together to support this large enterprise. Within Access Bank, we have seen the need for some succession plan, even as we go on. What this means is that every staff is accommodated.
Secondly, the compelling proposition around this is that Diamond Bank has strong retail capability. The idea cannot be to ask people to start going, because once you do that the first thing you are going to do is to lose your customers.
Can you explain more on this transaction; is this arrangement a merger or acquisition?
This is a merger executed technically through a scheme of arrangement in respect of which one party is issuing shares for the other. Regulators have given a no objection to this merger.
Notifications had been sent to all regulatory agencies. This thing broke on Sunday. We have since sent our notifications to all the regulatory agencies. The primary agency is the Central Bank of Nigeria, CBN, which has given us a ‘no objection’ letter. We have notified the Securities and Exchange Commission, SEC, The National Pension Commission, PenCom, and the Nigeria Stock Exchange, NSE.
Also the transaction would be concluded through a Scheme of Merger following Access Bank and Diamond Bank Court Ordered Meetings expected in March 2019 to approve the terms. Subject to shareholder approvals, final SEC, CBN, and PenCom regulatory approvals and Federal High Court, FHC sanction expected before end of first half, 2019 (H1’19) .
The cost synergies conservatively estimated at N30 billion per annum, pre-tax, to be fully realised within three years post-completion. Further revenue and balance sheet synergies to be evaluated by joint implementation committee.
What about the loan book of Diamond Bank, who is going to be responsible for the bad debts?
We have enough capital such that after Diamond Bank has written off its bad loans, the new and larger enterprise can continue.
Larger enterprise
Because we are doing the Tier-2 capital raising, we are even increasing and creating even much more capital cover. The new enterprise as large as it may be will be adequately capitalised.
What would be the fate of shareholders in the merged entity?
Shareholders are key. We are doing this to create value for shareholders. Ultimately when value is created, the main beneficiaries will be the shareholders. This transaction will be value accretive from the first year of legal merge. Internationally, mergers happen, if partners see that they can create a bigger entity.
Given the enlarged entity as a result of the merger, can Access Bank maintain its tradition of dividend payment?
The bank would maintain its dividend tradition. It is a commitment, which as management, we take fully into account. We realise we have different types of shareholders. There are some who the income is extremely important to, because that is what they sustain themselves with. We are not going to be irresponsible. Post-merger, we will still do as we have done up to date. We will pay dividends. We will continue to pay interim and full year dividends. (Vanguard)
