Access Bank Plc made bold its intentions in 2020 to play big on the African stage with a series of cross border acquisitions and now sustaining the momentum thus far in 2021.
In furtherance of this drive, Access Bank Plc last week entered into a definitive and binding agreement with ABC Holdings Limited to acquire 78.15 per cent shareholding in the African Banking Corporation of Botswana Limited (BancABC Botswana).
The transaction, which is subject to regulatory approvals and customary conditions precedent, is expected to close before the end of this quarter.
ABC Holdings is a subsidiary of London Stock Exchange listed group – Atlas Mara Limited.
Bostwana is renowned for its quality sovereign credit rating and stability. Access Bank’s market entry is expected to further solidify its strategy as, “a strong banking partner in key verticals across retail and corporate banking, including especially supporting trade in payments across southern Africa and Sub-Saharan Africa more broadly,” the Company Secretary, Sunday Ekwochi disclosed in a statement
Commenting on the deal, the Group Managing Director/Chief Executive Officer, Access Bank, Herbert Wigwe, said: “We remain committed to a disciplined and thoughtful expansion strategy in Africa, which we believe will create strong, sustainable returns for our shareholders and stakeholders at large, over the medium and long-term.
“The establishment of Access Bank through this acquisition in the Republic of Botswana will position the bank to deliver a more complete set of banking solutions to its clients active in and across the SADC and COMESA regions.
“This transaction complements our recent strategic growth acquisitions in South Africa, Zambia and Mozambique. We are building a bank of the future that Africans across Africa and the world would be proud of and look forward to welcoming the employees, customers and other stakeholders of BancABC Botswana to Access Bank.”
BancABC Botswana is the fifth largest bank in Botswana and is a very well-capitalised banking institution poised for growth and success in its local market. The bank has been perennially profitable, given an existing high-quality retail loan book with opportunities and scope for diversification and further expansion into corporate and SME lending.
Access Bank recently unfolded plans to expand to more African countries as part of a strategy to support trade and finance in the continent and take advantage of the newly formed African Continental Free Trade Area (AfCFTA).
According to Wigwe, across Africa, there is an opportunity for the bank to expand to high-potential markets, leveraging the benefits of AfCFTA.
He said AfCFTA, among other benefits, would expand intra-Africa trade and provide real opportunities for Africa.
He stated that the plan is for the bank to establish its presence in 22 African countries so as to diversify its earnings and take advantage of growth opportunities in the continent.
According to him, Africa has enormous potential and there are opportunities for an African bank that is well run, that understands compliance and has the capacity to support trade and the right technology infrastructure to support payments and remittances, without taking incremental risks.
“We believe that we are best positioned to basically do all of that. Our focus is to become an aggregator in Africa and we are building a global payment gateway and providing trade finance support and correspondent banking across the continent. We are focusing on the key markets.
“The approach would always be that in the country we wish to go to, that we have the right skills. We would not just be a drop in the country in which we are present, we would make sure that we have an impactful presence in each of the major countries in which we are present.
“In doing this, we are also mindful of the country we are going to so as to make sure that it is of benefit to the bank. As we do this, we are working with our friends and partners.
“We are diversifying our earnings away from volatile markets as well and we are orchestrating our operations from the global payments gateway and ensuring that using Access Bank UK, providing corresponding services from digital platforms, the overall profitability of our franchise,” he explained.
Commenting further, on AfCFTA, he said the bank would use its digital framework to benefit from the continental agreement.
“Coming to Nigeria, we think we need to continue to entrench ourselves in the local market because there is still so much work to be done.
“So, we are doing everything possible to satisfy our customers and also to ensure that our channels are adequately secured. We are also ensuring that our staff are very efficient,” the CEO said.
Since the commencement of the AfCFTA, analysts and stakeholders have expressed optimism about Nigerian banks’ readiness, saying the financial sector stands to benefit most from the continental agreement.
Speaking at the 2021 export seminar organised by Zenith Bank on Tuesday, Emefiele said: “We believe that the African Continental Free Trade Agreement (AfCFTA) offer significant opportunities for the Nigerian private sector to expand into new markets, and seek new export opportunities, particularly in the area of Manufacturing, ICT, Agriculture and Financial services, given our growing advantage in these areas relative to our counterparts in other parts of Africa.
“Full implementation of the AfCFTA, is expected to give Nigerian firms preferential access to markets in Africa worth $504.17 billion in goods and $162 billion in services.
The Head of Consulting, Agusto Consulting Limited, Mr. Jimi Ogbobine, said: “In terms of the AfCFTA, the Nigerian banking industry is more prepared than banks from Ghana, Kenya and maybe it is the South African banks that can give them a challenge in terms of exploiting AfCFTA.
“ But outside South African banks, Nigerian banks are the most prepared, especially when you are using footprints across the continents and for South Africa.”
The immediate past President of the Chartered Institute of Bankers (CIBN), Mr. Uche Olowu, said Nigerian banks with more trade will be in a better position to increase lending to the real sector which in turn will spur economic activities.
He said: “Banks are ready especially as banks have procured good lines that would support trading and supporting manufacturers, exporters, Nigerians products, which would thereby jumpstart economic activities.
“Nigerian banks are liquid and are prepared to lend out to those channels and outlets to serious manufacturers because it poses great opportunities for Nigerian banks and the Nigerian economy.
“Banks are there to intermediate and they have the information, data and all that it takes to support Nigerian businesses that are serious and credit worthy.”
Similarly, Managing Director, Ecobank Nigeria, Patrick Akinwuntan, said the success of African Continental Free Trade Area (AfCFTA) will rely heavily on the financial services industry’s ability to facilitate the liberalization process.
Akinwuntan, who made this submission at a webinar titled: Exploring Nigeria’s Readiness for the African Continental Free Trade Area organized by Deloitte, maintained that the banking industry in Nigeria is ready for the implementation of the AfCFTA, and that it will be responsible for facilitating transactions, mobilizing savings, allocating capital funds and monitoring managers so that the funds allocated will be utilised as envisaged, as well as managing risks.
According to Mr Akinwuntan, “Nigeria banks have strong capital and their operating synergies have been tremendous for the past five years particularly in the digital banking space.
“Nigeria is a leading player on the continent in payments required to facilitate trade; mobilization of savings required to galvanize the economy; focus on the SME segment, which is the largest employer of labour especially in the critical industries such as Agriculture as Africa is a continent that is rich in commodities; education of our teeming population and health.”
In view of the opportunities that exist in the market, Access Bank recently disclosed plans to transit to a holding company (HoldCo) structure.
The bank has received the Approval-in-Principle from the Central Bank of Nigeria for the restructuring and the HoldCo will consist of four subsidiaries in order to tap into the market opportunities that are available in the consumer lending market, electronic payments industry and retail insurance market.
Access Bank Group will consist of Nigeria, Africa and international subsidiaries, while the payments subsidiary will leverage the strong suite of the bank’s assets.
“Going into the fourth year of our four-year cyclical strategy, our focus remains on consolidating our retail momentum and expanding our African footprint in a sustainable manner,” Wigwe said.
Its recently released financial statement for the year ended December 31, 2020, showed that despite a challenging economic and regulatory landscape, the bank beat analysts and stakeholders’ expectations.
In the period under review, the bank recorded gross earnings of N764.7 billion for the financial year ended December 31, 2020, which was a 15 percent improvement from the N666.75 billion posted for the comparative period of 2019.
Profit before tax grew by 13 per cent to N125.9 billion from N111.9 billion, despite the high cost of operating the enlarged franchise and the increase in net impairment charge of near N43 billion arising principally from a Structured Trade Finance (STF) portfolio in the Access Bank UK.
According to the bank, the STF impairment is one-off/COVID-related and recoverable over the next 12-18 months against insurance cover from world class insurers.
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