Access Bank to join HoldCo league

Access Bank, the largest Deposit Money Bank in Nigeria by total assets has concluded plans to join the league of financial institutions that have transited to Holdco firms.

Shareholders of Access Bank Plc recently approved the restructuring of the Group into a non-operating financial holding company structure, Access Holding Company.

At a Court-Ordered Meeting held at the Access Tower in Victoria Island, Lagos, on Thursday, shareholders of the financial institution voted in favour of the corporate reorganisation, which would 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.

Dr Faruk Umar, Dr Faruk Umar, President, and Association for Advancement of Right of Nigerian Shareholders, applauded the move of the Bank to become a holding company while noting that the diversification was a welcomed one which would take the financial institution to greater heights given the manner the board had managed the bank so far.

He noted that the diversification would bring more profitability to the institution, given the quality of the members of the board, thus more returns for the investment of shareholders.

Patrick Ajudua, National Chairman, New Dimension Shareholders Association, also said the new development would be of great value to the bank, the shareholders and all stakeholders, adding to despite the security situation of the country and other parameters, the bank would achieve its objectives of group.

Mrs Bisi Bakare, Chairman, Pragmatic Shareholders Association of Nigeria, appreciated the board and management of the bank for proposing under the restructuring scheme to give shareholders one HoldCo share in exchange for every one scheme share, which would be transferred to the HoldCo without any further act or deed by shareholders.

Earlier at the meeting, the Chairman of Access Bank Plc, Dr Ajoritsedere Awosika, explained that the Board considered the restructure to be the most appropriate approach to create greater strategic flexibility and diversification of the Group’s revenues, adding that the restructured group would have a structure like that of some major global financial institutions, including those that Access Bank considers to be its peers and competitors.

She noted that HoldCo structure ensured full compliance with CBN’s Regulation on the Scope of Banking Activities and Ancillary Matters, which repealed the Universal Banking Guidelines and limited the ability of banks to undertake non-banking business, and Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria, 2014.

“Due to its oversight function, the HoldCo structure would facilitate the business growth of the banking group and expansion of services into underpenetrated regions in Nigeria, Africa and beyond,” she said.

She added that other considerations of the restructure include diversification into permissible financial services as it enables Access Bank to diversify its business portfolios into new areas within the financial service industry that are permissible by the CBN HoldCo regulation; as well as into Risk management which 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.

Also, she said the restructure would ease funding as it would facilitate a consolidated financial strength of the Group, which would improve access and ability to raise capital with benefits including lower transactions costs.

Other benefits according to Dr Awosika includes capital allocation and speed in decision making as the Bank is unburdened by the oversight functions and responsibilities of managing the subsidiaries and ensuring the Bank is solely focused on its core operations.

Access Bank, the largest bank by assets solidly grew its Profit Before Tax (PBT) by 30 percent to N60.1 billion in the first quarter 2021, from N46.2 billion recorded in the same period last year, an impressive performance despite the challenging operating environment.

The banks profit before tax saw a significant increase of 31per cent y/y to N97.5billion (H1 2020: N74.3billion).

In the third quarter ended September 30, 2021, the bank’s Profit before tax grew by 16% to N135bn from N116.623billion in 2020.

While its Interest Income grew by 24% to N395bn from N318bn in the previous quarter, Profit after tax grew by 19% to N122bn.

In the same vein, Net Assets grew by 6.4% from N751bn to N799bn. Access Bank has grown its profit before tax by 172 per cent to N135.07billion in nine months of 2021 from N78.169billlion in 2017.