Nigeria’s Access Bank snaps up Diamond to form Nigeria’s largest retail bank by customer numbers.
Diamond Bank’s shares are in freefall, down from NGN3.6 to NGN1.05 a fall of around 70%.
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Access is reportedly paying up to NGN3.00 per share for Diamond.
Access Bank has a network of around 392 branches. Troubled rival Diamond operates 264 branches.
A combination of Access and Diamond will form a bank of more than 25 million customers.
The banks aim to complete the transaction in the first half of 2019.
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By GlobalDataCompletion of the deal is subject to shareholder and regulatory approvals.
In addition, Diamond is selling its international operations including subsidiaries in West Africa and the UK.
US private equity group Carlyle Group invested $147m in Diamond Bank in 2014 as part of Diamond’s $305m million rights issue.
Access Bank snaps up Diamond: Carlyle faces heavy loss on investment
As a result, Carlyle acquired a 17.7% stake in Diamond Bank.
Diamond is suffering challenges with non-performing loans and profitability, resulting in Moody’s downgrading Diamond two notches to Caa3 last week.
Diamond was also downgraded by agency Standard & Poor’s.
Retail banks in Nigeria are under pressure from the central bank to boost financial inclusion. Only around 37 million of Nigeria’s 97 million adults are banked.
In 2012, The Central Bank of Nigeria launched its National Financial Inclusion Strategy (NFIS). It set a target of a financial inclusion rate of 80% for Nigeria’s adult population by 2020.
Notably, since launching in 1990, Diamond has been among the most active local banks to promote financial inclusion. It has grown its market share by offering financial services to 10 million previously unbanked individuals.
This year Diamond has also partnered with Facebook in a project to encourage young Nigerian entrepreneurs.
In September, the Central Bank of Nigeria revoked the operating licence of Skye Bank.
In its place, it created an entity called Polaris to assume all the assets and liabilities of the failed Skye Bank.
