Access, Sterling to Adopt HoldCo Structure

Access Bank Plc and Sterling Bank Plc recently announced that they have respectively received the Central Bank of Nigeria’s Approval-in-Principle to restructure their operations into a holding company (HoldCo) banking model.

Both banks disclosed this in separate statements.

For Access Bank, which revealed this in a statement posted on the Nigerian Stock Exchange website, which was signed by its Company Secretary, Sunday Ekwuochi, the proposed HoldCo structure would enable it further accelerate its objectives around business diversification, improved operational efficiencies, talent retention as well as robust governance. However, Access Bank stated that further details regarding the proposed HoldCo structure would be communicated to the market in due course.

In addition, Access Bank also announced definitive agreements to bolster its market position in Mozambique as well as to enter the South African market.

“This follows the recent transaction with Cavmont Bank in Zambia and further embeds the bank’s presence in the SADC region, one of Africa’s most important trading blocs.

“These transactions will result in a more connected African banking network that builds on Access Bank’s existing foundation and enhances its value proposition to stakeholders, including customers and employees.

“Shareholders will benefit from the economies of scale of a larger banking network, including the associated cost efficiencies arising from the bank’s federated IT system and replication of investments in innovative products across a wider range of markets,” it stated.

According to the bank, a broader and connected Africa network remains a core strategic focus for geographic earnings growth and diversification, which would further enhance profitability and risk metrics. Through these transactions, Access Bank stated that it would be well placed to promote regional trade finance and other cross-border banking services, further leveraging its presence in key global trade corridors in the UAE, the UK, China, Lebanon and India.

Furthermore, it announces that it has received regulatory approvals to commence operations in Mozambique under the name Access Bank Mozambique, S.A.

It also announced that its subsidiary, Access Bank Mozambique, has entered into a definitive agreement with ABC Holdings Limited, a wholly owned subsidiary of Atlas Mara Limited to acquire African Banking Corporation (Moçambique), S.A., for cash, in a combination of definitive and contingent consideration.

“This transaction will be funded from the capital invested by the bank in Access Bank Mozambique and will result in the Access Bank Mozambique becoming the seventh largest bank in the country, up from 20th. As an enlarged business, Access Bank Mozambique will have an enhanced capacity to play a more impactful role in the growth of the Mozambican economy.”

The transaction is however subject to regulatory approvals and customary conditions precedent.

“Building on its strategy of delivering a robust banking operation which connects key African markets, Access Bank has entered into a definitive agreement with GroCapital Holdings to invest into Grobank Limited over two tranches.

“The first is an initial cash consideration for a 49 per cent shareholding, increasing to a majority stake in the second tranche. Both tranches are subject to various regulatory approvals and the overall transaction subject to Grobank’s shareholder approvals.

“GroCapital, whose shareholders include the Public investment Corporation – Africa’s largest investment manager, and Fairfax Africa Holdings – a leading global investor, will retain an existing but diluted shareholding in Grobank.

“A presence in South Africa will serve as a cornerstone for further momentum in delivering on Access Bank’s mission to be Africa’s gateway to the world. The proposed transaction is expected to provide access to the largest banking market in Africa and enable Access Bank to consolidate its Southern African and broader African footprint with enhanced capabilities to fulfil the needs of multi-national clients,” it added.

For Sterling Bank, its Managing Director and Chief Executive Officer, Mr. Abubakar Suleiman, said the bank’s decision to operate as a Holdco was driven by its plan to spin off its non-interest banking (NIB) window, which became operational in January 2014, into an autonomous entity.

According to him, the bank is currently in the process of meeting the conditions for the final approval from the CBN.

Suleiman explained that HoldCo would be designed to operate on three major premises: Specialisation, Partnership and Digitisation, adding: “The conventional bank will focus on building skills and using technology to provide solutions in the areas that are critical to development in the country, Health, Education, Agriculture, Renewable Energy, Transportation (HEART).”

He said the NIB will focus on building partnerships that connect individuals and businesses leveraging technology to create business optimisation while solving the individual’s daily financial needs. He added that the overall business will focus on social impact, corporate responsibility and the highest ethical standards in its dealings.

Suleiman said the group’s digitisation drive will create an enabling environment for both financial institutions to grow while providing services and support to build efficiencies in different ecosystems.

The CEO said the bank believes that the proposed structure incorporates efficiencies around operations and financing efforts that will support individual businesses in reaching their full potentials through increased portfolio diversification as the Holding Company structure enables the individual businesses achieve greater results based on focused management of the distinct entities.

He said other benefits of the restructuring will include improved efficiency resulting from the consolidation of key functions such as compliance, risk management and other support functions.

“This is expected to yield improved prospects for individual business growth and enhanced corporate governance, which serve to promote a consistent culture across the group and quality of service to customers, thereby facilitating sustainability of earnings,” he said.