Access Bank Plc, Nigeria’s biggest lender by total assets and customer base, has just extended its frontiers yet again with the completion of its acquisition of African Banking Corporation of Botswana Limited, it announced recently.
Access Bank acquired a 78.15 per cent shareholding in Botswana’s fifth-largest bank, a well-capitalised franchise poised for growth in its local market.
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Access, which already operates in nine other African countries, and has an operating license in a tenth – Guinea, says that its latest acquisition is sure to form part of its nexus for trade and payments in southern Africa and the broader COMESA trade region.
Interestingly, this transaction marks the fourth brownfield project of Access in the year, having made acquisitions in Zambia, South Africa, and Mozambique in the first half of the year. Having successfully leveraged both organic and inorganic growth in Nigeria, to become the market leader, Access Bank seems to be extending its acquisition strategy to other African markets, as it hopes to diversify into new markets to achieve earnings growth and stability.
Commenting on the transaction, Dr Herbert Wigwe, GMD/CEO of the bank, said: “We are pleased with the successful conclusion of this transaction which will provide significant synergies by combining BancABC Botswana’s strong retail banking operation with Access Bank’s wholesale banking capabilities. It will also strengthen the quality of earnings through revenue diversification and growth in the corporate and SME banking segments for BancABC Botswana. The combination is another step towards our broader vision of becoming the World’s Most Respected African Bank.”
As of June 2021, Access Bank Group had a total asset of N10.1trillion or USD24.3 billion. It grew audited profit after tax by 42% in the first half of the year to rank the second most profitable bank in Nigeria, throwing behind GTBank which hitherto was renowned as the bank to beat in the country.
While Access Bank’s triumph may not have been without bumps and concern, especially with its notable acquisition of InterContinental Bank and Diamond Bank in 2011 and 2019, respectively, it may have mastered the art of buying over rivals to consolidate its market position or as a notable entry into new markets.
“This is not a coincidence. Access Bank has been deliberate about its growth, both within and outside of Nigeria,” Mr Yadinma Onwu, the Executive Vice Chairman of Funds Matrix Asset Management, said about the acquisition.
He said the bank’s leaders knew from the beginning that the changes in the banking industry thrown up by the reforms in different markets offer opportunities for inorganic growth to catapult it to a dominant player status and the leadership of Access Bank is never shy at taking a shot at acquiring a peer.
“Indeed, the Group has a strong heritage of acquisition. What is important is not so much the strategy but the ability to consume the acquired assets and integrate efficiently at little cost and ensure effective synergy,” Onwu said.
A major concern among some investors is the pace of acquisition especially as this becomes the fourth acquisition in less than a year. Yadinma believes it’s a valid concern but thinks the leadership of Access Bank can handle the challenges, having demonstrated capacity in consuming bigger entities, such as InterContinental and Diamond banks, which were hitherto top-tier banks in Nigeria.
The bank’s leaders set targets and consistently exceeded them. In 2002, for instance, it aimed to be among the top 10 banks in the country, and by 2007, it was ranked 9th. The bank noted it wanted to be one of the top-3 banks in Nigeria by 2020 and at which time it had become the Numero Uno.
This stance was also reiterated in a medium-term strategy that Access Bank’s leadership presented to the Nigerian Stock Exchange (now NGX Limited) on July 3, 2013.
Access Bank became Nigeria’s biggest bank by the number of customers with the acquisition of Diamond Bank, which had a strong retail franchise in Nigeria. “It was a complimentary transaction. For Diamond, it brought Access Bank’s strong culture of risk and capital management expertise, as well as a clear strategy for sustainable growth. On its part, Access benefited from Diamond Bank’s peculiar retail banking expertise and strong digital offering”, said Dr Lizzie Kings-Wali, the Chief Executive Officer of Blackstone Capital Limited, a Lagos-based financial service firm, offering personal and business loans, among other financial services.
With Access Bank’s entry into these new markets, earnings contribution from the Rest of Africa (i.e Africa ex-Nigeria) is expected to ramp up fast. As at June 2021, some 14.2% of Access Bank Group’s revenue of N450.6 billion was derived from the Rest of Africa while this segment of the business contributed 23.4% of profit before tax, even so this business cluster accounted for barely 9.9% and 9.0% of total assets and total liabilities respectively.
This signals the relatively higher profitability of the Rest of Africa subsidiary operations and perhaps a major driver of Access Bank’s appetite to deepen its play in these foreign markets to consolidate its Group’s position. Though some market watchers raised concern about the Group’s decision to divest from some foreign markets in 2011/2012, and hoped it would not be a repeated case in the medium term, Access Bank seems poised to take the challenge to more markets in Africa. Interestingly, its focus has been largely on Anglophone African countries; it may perhaps take a plunge into Francophone markets, as it expresses its new growth appetite, especially in deepening geographic scope and spread.
The Shares of Access Bank listed on the Nigerian Exchange Limited (NGX) opened the week bearish, shedding 1.04% on October 18, 2021 to close at N9.60. Nonetheless, it has gained 13.61% year-to-date, outperforming the overall market index, NGX All-Share Index, and the Banking Sector index, which have barely returned 2.17% and 1.67% year-to-date, respectively.
Botswana, a country of just about 2million people, is a diamond-rich southern African country, sharing borders with South Africa, Namibia, Zimbabwe, and Zambia. Reflecting the prudent economic management and good governance, Botswana has become one of the world’s development success stories, transiting rapidly to an upper-middle-income country, with a transformation agenda of becoming a high-income country by 2036.
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