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Access Bank moves toward consolidating operation in Holding company

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Nigeria’s Access Bank is finalising plans to transit to Holding company from commercial banking group, according to a regulatory filing by the lender.

According to Access Bank, the Federal High Court has sanctioned the scheme of arrangement for the transition, noting that the sanctioning of the scheme by the court rounded off the approving phase of the scheme, allowing the bank to conclude the transaction.

Shareholders of the bank had earlier approved the process leading to the transition to holdco at a combined physical and virtual court-ordered meeting.

The bank had also secured the “no-objection” approval of the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN).

Chairman, Access Bank Plc, Ajoritsedere Awosika, said the restructuring of the banking group into a holdco will enable the group to have a structure like that of some major global financial institutions, including those that Access Bank considers to be its peers and competitors.

According to her, the Board expects that the restructured group will have greater flexibility to adapt to future business opportunities, market and regulatory changes than is the case.

She outlined that the restructuring was necessitated by several rationales including the need to comply with regulatory requirements, growth and expansion, diversification, risk management, ease of funding, capital allocation, and speed of decision making.

According to her, the holdco structure ensures full compliance with CBN’s Regulation on the Scope of Banking Activities and Ancillary Matters (Regulation 3), 2010, which repealed the Universal Banking Guidelines and limited the ability of banks to undertake non-banking business, as well as Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria, 2014.

“Due to its oversight function, the holdco structure will facilitate the business growth of the banking group and expansion of services into underpenetrated regions in Nigeria, Africa and beyond.

“The holdco structure will enable Access Bank to diversify its business portfolios into new areas within the financial service industry that are permissible by the CBN holdco regulation.

“The holdco structure would ring fences each business from the risks of the other, by preventing the business performance of one business from affecting the performance and valuation of another, Accordingly, under the holdco structure, the assets of the bank are ring-fenced from the non-banking businesses,” Awosika said.

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She added that the new structure will facilitate a consolidated financial strength of the group, which will improve access and ability to raise capital with benefits including lower transactions costs, amidst others.

According to her, the holdco structure will also expedite capital and liquidity, and provide flexibility to accommodate leverage with minimal risk to regulatory ratios.

She pointed out that the new structure would unburden the bank from oversight functions and responsibilities of managing the subsidiaries and ensure the bank is solely focused on its core operations. This fosters faster decision-making and business growth.

“The Board considers the restructure to be the most appropriate approach to create greater strategic flexibility and diversification of the group’s revenues.

“The restructure will result in shareholders holding shares in the holdco in the same proportion as their current holdings in the bank and the bank’s shares being held wholly by the holdco, which will be a regulated entity for CBN purposes.

“The bank will continue to be subject to the full suite of CBN banking regulations and, in all other material respects. The banking subsidiaries will continue to be subject to the oversight of the respective prudential regulatory authorities in their jurisdictions. The group’s firm-wide risk management framework will continue to apply across the entire restructured group,” Awosika said.

She urged the shareholders to approve the scheme document noting that the board considers the terms of the scheme to be fair, reasonable and in the best interests of the shareholders.

The transition will enable the group to invest in non-banking subsidiaries, a move that places the first tier bank in a pillar position to expand into a global one-stop financial services group.

Under the transition arrangement, the entire issued share capital of Access Bank comprising of 35.545 billion ordinary shares of 50 Kobo each will be converted into same shares of holdco and distribute to all shareholders of Access Bank on the basis of one share of Access Bank in exchange for one share of the new Access Holdings Plc.

Thereafter, Access Bank Plc will be delisted and Access Holdings Plc will be listed on the Nigerian Exchange (NGX).

The holdco is, however, expected to make new major investment moves in the next few months, according to insiders with knowledge of board and management strategies.

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