- How Distressed Oil Sector Loans Damaged Diamond Bank
More facts have emerged on the reasons why the defunct Diamond Bank surrendered itself for a business combination deal with Access Bank Plc.
The deal was consummated on April 1.
According to a report obtained yesterday, between December 2014 and June 2018, the immediate past management of Diamond Bank under the leadership of Mr. Uzoma Dozie as Chief Executive Officer, inherited a distressed oil and gas portfolio of $1.8 billion (N302.6 billion).
Of this amount, the sum under Watch list and non-performing loans (NPLs) stood at $406 million (N68.9 billion) and $73 million (or N12.3 billion), respectively.
In addition, the bank had foreign currency balance sheet mismatch in excess of $883 million as at October 31, 2015, resulting from maturing trade obligations and customer transactional instructions.
Similarly, Diamond Bank had unpaid billions of naira to the federal government’s Treasury Single Account (TSA), resulting to regulatory sanctions and negative public perception and waning customer confidence.
The immediate past management of the defunct bank preserved Diamond Bank’s licence by paying down the inherited forex liquidity mismatch, it stated.
Furthermore, it showed that the inability of Diamond Bank to repay the Nigerian National Petroleum Corporation/Nigerian Petroleum Development Company Limited’s funds to the TSA, “due to the application of those funds in the creation of long-term oil and gas and power loans was a major threat to the bank’s corporate existence.”
Without external management, the then management of the bank employed every legitimate means, including strong negotiation and relationship management skills to have the issue resolved.
According to the report, as at the end of September 2018, this obligation had been fully extinguished.
While resolving this, the Uzoma Dozie-led management built an enviable retail franchise that, stand-alone, can generate sustainable profitability and low-cost deposits.
However, the value of the retail deposit was hidden in bad corporate loans inherited by the then management.
In addition, the management then developed long-term sustainable relationship with global institutions, which has helped to build thrust in its brand.
These included Women’s World Banking, Bills and Melinda Gates Foundation, Afreximbank, International Finance Corporation, Ecowas International and Development Bank, among others.
Commenting on the merger with Diamond Bank, the Group Managing Director/Chief Executive Officer, Access Bank, Mr. Herbert Wigwe, had said: “Together, we would have 27 million customers, which is the largest customer base of any bank on the continent. We would have 33,000 point of sale (PoS) terminals, 3,300 automated teller machines (ATMs) and all of that.
“Access Bank has grown over time and has built a very strong wholesale banking capability. We have also shown significant expertise as far as treasury is concerned, risk management as well as our capital management plan.
“We created and pushed a very strong value chain strategy which was our own way of building our retail business.
“This was because we realised that the creation of a large diversified bank is critical, not just for Nigeria, but in Africa and the world. If you go to any part of the world, what you tend to see is that the top three or top five banks technically control market share.”
Speaking further, Wigwe said the combination of Access Bank and Diamond Bank would ensure that “we are able to take and solve customers’ issues right from the wholesale end, down to the man in the village, just because of the use of technology.”
Shoprite: New Investor Assures Nigerian Consumers of Improved Services
Following the acquisition deal between Retail Supermarkets Nigeria Limited (RSNL), owner and operator of the Shoprite stores in Nigeria, and Ketron Investment Limited, the new investor has assured consumers of robust services in the years ahead.
Ketron, a Nigerian company owned by a group of institutional investors led by Persianas Investment Limited, recently acquired the supermarket brand.
The divestment by Shoprite International was in line with its strategy to change from an ownership model to a franchise model. This change in ownership has also received the approval of the Nigerian regulator the Federal Competition and Consumer Protection Commission (FCCPC).
Speaking on the acquisition, Chairman, Ketron Investment Limited, Tayo Amusan said, “We are thrilled to complete the acquisition of Shoprite, ensuring the continued operations of one of the biggest retail success stories in Nigeria. We look forward to building an even stronger company following our acquisition and are excited about the greater impact we will achieve to the benefit of our customers and other stakeholders now and well into the future.”
Since its launch in Lagos in December 2005, Shoprite has expanded to 25 outlets across eleven states and Abuja, FCT.
According to the terms of the acquisition, Ketron acquired 100 per cent ownership of Shoprite in Nigeria and will continue operations across all existing outlets. It also plans to open additional stores and introduce more Nigerian-made products in the stores. This he noted, will also result in more opportunities for Nigerians.
“It is our vision to create fundamental change for the better within Nigeria,” said Amusan. “With benefits from our knowledge of the ever-evolving Nigerian retail marketplace, well-grounded social and economic research, and hands-on experience from our team, we are confident that this acquisition will foster a robust and sustainable business model for the ultimate benefit of all stakeholders,” he concluded.
Professional services firms, KPMG Advisory Services, MBO Capital Management Limited and Banwo & Ighodalo advised Ketron on the deal. CEO, MBO Capital, Jide Ogundare, stated that the deal signalled an opportunity for Ketron to uphold a thriving business.
“It will be hard work,” he said, “but with the plans we have in place, and with the support of the larger Shoprite family in Nigeria including our staff and every Nigerian shopper that walks through our doors, we are confident of success.”
Shoprite Holdings is Africa’s largest food retailer, operating 2,843 supermarkets in 15 countries and serving 35 million customers in Africa and the Indian Ocean Islands. At the moment, Shoprite Nigeria’s supply chain includes more than 300 leading Nigerian suppliers, and boasts small businesses and farmers among its partners and suppliers.
Ketron said Shoprite International will continue as technical advisers and Ketron will sustain the relationships established by Shoprite over the last decade and a half while ensuring a smooth “transfer of values.”
CBN Offers Assistant In Printing Gambia’s Currency
The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said that the bank is willing to assist the Central Bank of the Gambia to print its legal tender.
Emefiele said this in Abuja on Tuesday during a two-day visit by a delegation from the Central Bank Of Gambia, led by its governor, Mr. Buah Saidy.
This was in response to a request by the CBG for a possible partnership to tackle acute currency shortages among other currency management challenges in the country.
Saidy informed the CBN governor that relying on its current printer, De La Rue of London, for its currency needs was expensive and unsustainable.
He explained that it costs the bank about £70,000 to lift printed currencies from Sri Lanka to the Gambia.
In response, the CBN Governor assured his visitors that the bank had an extremely competitive advantage to undertake the currency printing for Gambia, adding that the Nigerian Security Printing and Minting had a lot of idle capacity to satisfy the demand of the CBG.
He said, “I note your point on currency management. The Nigerian mint was set up in the early 1960s and we’ve been producing our currency since the early 60s and we have a lot of idle capacity to ensure that instead of you going to Europe or other countries, you will be able to benefit from our ideas.
“Our colleagues will take you to the security printing facility. Our colleagues that came in from Liberia two months ago were fascinated by the kind of facilities we have at our security printing and minting facility and I am sure that you will also enjoy them.
“And I am sure they will follow you back to the Gambia to see how they can help you to structure your economic order quantities so we can also be of assistance in printing your currency.
“And I can assure you that we can be extremely competitive if only from the standpoint of logistics and freight from Europe but it’s just going to be a few hours from here to the Gambia and the rest of them.”
The CBG Governor also noted that one of the purposes of the visit was to benefit from the CBN’s vast experiences on how it had successfully regulated the financial system and sought assistance in the areas of information technology, modernisation, cybersecurity, forex shipping and management, among others.
Emefiele in response attributed the successes to the support which the apex bank had enjoyed from the National Assembly.
He said, “On the issue of the CBN independence, I thank you for the kind words. But I think the point is that we thank our own parliament. Our parliament has been extremely supportive of the CBN.”
He, therefore, advised the CBG to work with its parliament to create laws that would provide the independence needed.
Emefele further stated that the apex bank was not sparing any effort to address issues of supply management to ensure economic growth.
Ardova to Acquire 100 Percent Stake in Enyo Retail and Supply Limited
Ardova, an indigenous energy company headquartered in Lagos, Nigeria, with extended operations in Ghana, has reached an agreement with Enyo Retail and Supply Holding Limited to acquire a 100 percent equity stake in Enyo Retail and Supply Limited.
This announcement follows the execution of a share purchase agreement by the two companies.
The company disclosed in a statement signed by Oladeinde Nelson-Cole, Company Secretary/General Counsel, Ardova Plc.
The statement highlighted the parties’ commitment to closing the transaction in line with the share purchase agreement, as soon as agreed closing conditions are satisfied, and regulatory approval is received.
Stanbic IBTC Capital Limited and Banwo & Ighodalo are acting as Financial and Legal Advisers respectively to AP, while Rand Merchant Bank and Herbert Smith Freehills Paris LLP are acting as Financial and Legal Advisers to ERSHL and certain of its shareholders.
Olumide Adeosun, Chief Executive Officer of AP, stated that “On completion, this acquisition will lead to a stronger downstream energy group that benefits from the increased customer reach and service delivery excellence of both companies, with the combination expected to produce stronger financial results.”
Ardova Plc and Enyo Retail & Supply Limited will communicate details of future progress made on this acquisition.
Business3 weeks ago
End Of The Road For Internet Explorer As Microsoft Pulls The Plug
Cryptocurrency4 weeks ago
National Bank of Egypt Joins Ripple Network for Cross-Border Payments
Cryptocurrency3 weeks ago
Can cryptocurrency survive regulators? Here’s what Ripple CEO says about XRP’s future
News4 weeks ago
Akeredolu Replies Malami, Open Grazing Ban in South Is Irreversible
Ethereum4 weeks ago
Ethereum Closes In on Long-Sought Fix to Cut Energy Use Over 99%
Telecommunications4 weeks ago
Nigerians To Submit Phone IDs In Three Months says NCC
Cryptocurrency3 weeks ago
BankDhofar Launches Mobile Banking Payments from Oman to India with RippleNet
Social Media4 weeks ago
Facebook Africa Launches ‘Made by Africa, Loved by the World’ Ahead of Africa Day