Merger: Moody’s Reviews Access Bank for downgrade, Diamond Bank for upgrade

• Merger: Moody’s Reviews Access Bank for Downgrade, Diamond Bank for Upgrade

A review, following the approval of the planned merger of Access Bank PLC and Diamond Bank PLC by the Securities and Exchange Commission on January 18, has placed on downgrade Access Bank PLC’s ratings and an upgrade for Diamond Bank PLC’s ratings.

The review, which was assessed by Moody’s Investors Services, a foremost global rating agency has placed on review for downgrade Access Bank PLC’s B2 long-term local currency deposit rating, its B3 long-term foreign currency deposit rating, its b2 Baseline Credit Assessment (BCA) and adjusted BCA, its B1 long-term Counterparty Risk Rating (CRR) and it’s B1 (cr) long-term Counterparty Risk Assessment (CRA).

Also, the Caa1 long-term deposit ratings, caa3 BCA, Caa1 CRR and Caa(cr) CRA of Diamond Bank PLC have been placed on review for upgrade by Moody’s.

According to Moody’s, the rationale for initiating a review for downgrade of Access Bank’s ratings is the potential negative pressures on its capital and asset risk metrics as a result of the merger, while Diamond Bank’s review for upgrade is driven by the fact that upon completion of the merger, Diamond Bank’s assets, as well as liabilities and undertakings will be assumed by Access Bank, a stronger entity who will become an obligor of former Diamond Bank’s creditors.

The rating agency, Moody’s will further assess the extent to which Diamond Bank’s current solvency weakness, as a result of its high Non Performing Loans, low provisions and low capital will be addressed by the merger.

Upon completion of the merger, Diamond Bank’s ratings will be withdrawn. This is because, the bank will cease to exist as a separate legal entity.

However, the review for Access Bank and Diamond Bank will take place at the conclusion of the proposed merger.

Court ordered meeting of the merger is scheduled to take place on March 5th.