It will be Nigeria Stock Exchange (NSE) listed Access Bank Group’s 5th bank takeover in 2021 should the Zambian regulatory authorities nod the merger and acquisition transaction. What started as an Atlas Mara takeover of BancABC in the copper producer Zambia has morphed into an M&A opportunity that saw the takeover of one of Zambia’s financial institutions with presence in the key provinces, Finance Bank. It is becoming more evident that capital, is no longer patient enough for organic type growth but investors have higher appetite for risk in already existing growth. On October 25, Access Bank of Nigeria, Africa’s largest banking group, announced a merger with Atlas Mara (the Zambian unit) subject to regulatory approval.
According to a note shared by Access Group Company Secretary Sunday Ekwochi on October 25, Access Bank has executed a binding agreement with Atlas Mara Zambia on a proposed merger with its Zambia’s subsidiary, Access Bank Zambia.
READ ALSO: Zambia’s Central Bank nods Access Bank – Cavmont Capital Holdings Amalgamation
What the market is experiencing is a convergence of two strategies namely, a resilient bank in Africa’s red metal producer with solid financial performance and impeccable balance sheet growth over the few years, aligning with an aggressive African giant attempting to remain the largest bank on the continent through building a strong footprint more recently on the Southern part of the equator. Access Bank Group recently took possession of 78.15% of the Botswana BancABC operation adding to its recent acquisition in Zambia that facilitated the exit of Capricorn Holdings in the Cavmont Capital Holding takeover. This resulted in a wider balance sheet and operation that saw the Zambian subsidiary absorb the Lusaka Securities Exchange (LuSE) listed bank with technology synergies inherited. Other units Access Bank acquired in the last year or two include African Banking Corporation Mozambique.
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“The transaction represents a milestone that brings us closer to achievement of our broader objectives. The merger of Atlas Mara with Access Bank Zambia is expected to augment our presence in Zambia and the broader COMESA region, Africa’s largest free trade area. We are particularly excited by the prospects of increased earnings contributions to the bank from the enlarged Access Bank Zambia which has also announced the appointment of Lishala Situmbeko as Managing Director who brings over 25 years of cognate experience and deep local relationships into our Zambia operation.”
Access Bank Group Managing Director Dr. Hebert Wigwe
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What these mergers spell out vividly is a wholesale bank acquiring units with very string retail capabilities that maximizes opportunity to service clientele on the continent.
AMALGAMATION OPPORTUNITY IN THE ZAMBIA MARKET IS EVIDENT
The M&A transaction also reveals the amalgamation opportunity the market has, with a number of banks with small cluster balance sheets. In 2015, then central bank governor Dr. Michael Gondwe said, he would rather be monetary head of a few, yet well capitalized banks than have too many players that would not even fund a shopping mall but opted to syndicate for deals as small as $20 million. It was expected seeing that he was coming from the Kenyan market having served at PTA Bank (now Trade Development Bank – TDB) where magnitude is key to enable greater risk taking and ultimately capitalization levels.
The copper producer has in the recent past, seen quite some decent activity in the M&A space as the economy gears for a rebound following economic turbulence ranging from an energy poverty era to fiscal fragility induced hurdles to most recently the COVID19 pandemic that has seen banks bear the brunt of an evolving threat landscape. The transaction does bolster competitiveness on the positive side especially at a time when the political landscape has changed, the government curve compressed (as interest rates ebb) and Zambia’s outlook brightens amidst a debt restructure and International Monetary Fund (IMF) bailout talks.
The transaction will levitate Access Bank into the top (4) on the Zambian score board by balance sheet size and hopefully profitability.
Access Bank Group (rated ‘B’ by Fitch) has a total asset size north of $18 billion and a workforce of 28k. The 2019 merger between Access Group and Diamond Bank made the conglomerate the largest financial institution (FI) in Africa. Atlas Mara Limited is listed on the London Stock Exchange – LSE.
The Kwacha Arbitrageur
