Access Bank Gets CBN’s Approval to Convert to Holdco As It Ventures into South Africa and Mozambique

Following GTBank and Sterling Bank’s announcement of going holdco, Access Bank announced on Tuesday that it has gotten approval-in-principle from the Central Bank of Nigeria (CBN), to restructure to a holding company.

The bank said the details of the structure will be announced later, but the holdco structure will help it to expedite its objectives around business diversification, improved operational efficiencies, talent retention as well as robust governance.

A holding company is a corporation that owns a controlling interest in one or more banks but does not itself offer banking services. Holding companies do not run day-to-day operations of the banks they own. But they exercise control over management and company policies.

Access Bank used the opportunity to announce also, its expansion plan to other African countries. The bank said it has secured definitive agreement to bolster its market position in Mozambique and enter the South African market. The move 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.

According to the bank’s management, these transactions would 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.

It added that shareholders would 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.

The bank’s management explained that a broader and connected Africa network remains a core strategic focus for geographic earnings growth and diversification, which will further enhance profitability and risk metrics.

“Through these transactions, Access Bank will 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,” Access Bank said in a statement.

Using the medium, the bank also announced that it has received regulatory approvals to begin operations in Mozambique, using the name, Access Bank Mozambique, S.A. (Access Bank Mozambique). It said its subsidiary, Access Bank Mozambique, has entered into a definitive agreement with ABC Holdings Limited (“ABC Holdings”), a subsidiary of Atlas Mara Limited (Atlas Mara) to acquire African Banking Corporation (Moçambique), S.A, (“BancABC Mozambique”) 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 7th largest bank in the country, up from the 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, particularly in the emerging oil and gas sector, an industry that Access Bank has deep experience in. The transaction is subject to regulatory approvals and customary conditions precedent,” the bank said.

Regarding its presence in South Africa, Access Bank explained that it is building a strategy to deliver a robust banking operation that connects key African markets; the bank said it has also entered into a definitive agreement with GroCapital Holdings (“GroCapital”) to invest in Grobank Limited over two tranches.

It said the first is an initial cash consideration for a 49 percent 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 Africa and broader African footprint with enhanced capabilities to fulfill the needs of multinational clients,” the bank said.

Speaking on the development, Access Bank CEO, Herbert Wigwe said the bank is focused on building the scale needed to become a leading African bank; one that leverages our experienced and growing talent base and key stakeholder partnerships towards driving sustainable impact and profitability.

“These transactions will significantly strengthen our presence in Southern Africa and further our footprint for growth in the SADC region. With a broader presence across the continent, Access Bank will be better placed to support our customers who are increasingly looking towards intra Africa growth,” he said.