Access Bank Group looks forward to another decade of growth as it begins the process of evolving into a holding company (HoldCo) following a successful court-ordered meeting last week.
The non-operating HoldCo, known as Access Holding Company Plc, would serve as the parent company for the group – Access Bank and its many subsidiaries.
The restructuring is being implemented through a plan of arrangement pursuant to Section 715 of the Corporations and Related Matters Acts (CAMA) and Securities and Exchange Commission (SEC) rules.
The bank is considering a one-for-one share as it migrates Access Bank shareholders to the new company.
Last Thursday, the bank’s shareholders voted overwhelmingly in favor of the new regime. Shareholders and directors also spoke of the benefits of the new restructuring and were optimistic that the bank was ready for another era of growth.
Chairman of the board, Dr Ajoritsedere Awosika, said the restructured group would have a “similar structure to some major global financial institutions, including those that Access Bank considers its peers and competitors”.
Under the new structure, which will take off next year, the parent company will own 100% of the shares of Access Bank Nigeria and 100% of the shares of all non-banking subsidiaries of the bank.
Access Bank Nigeria will in turn own all its banking subsidiaries (15 in total) and its three representative offices in India, China and Lebanon. Awosika said the restructured group would have “greater flexibility to adapt to future business opportunities, market and regulatory changes than is currently the case.”
The President also listed seven key benefits of the new structure. Among them is regulatory compliance wherein the HoldCo structure would ensure full compliance with the Central Bank of Nigeria (CBN) Regulations on the Scope of Banking Activities and Ancillary Matters (2010). This regulation limits the business activity of a bank to strictly commercial banking activities and thus allows such non-banking activities to be transacted through subsidiaries owned by the HoldCo.
She said the new structure would facilitate the growth and expansion of the bank across Africa, facilitate consolidated financial strength, accelerate capital and liquidity growth, provide flexibility to adapt to the impact leverage with minimal risk to regulatory rations and would be required to relieve the bank of supervisory functions and management responsibilities. subsidiaries, thus concentrating on its core business.
“Because of its oversight functions, the HoldCo structure will facilitate the growth of the banking group and the expansion of services to under-penetrated regions in Nigeria, Africa and beyond. The new structure will also enable Access Bank to diversify its business portfolios into new areas of the financial services sector authorized by the CBN and, furthermore, will protect each business from the risks of the other, preventing the business performance from d one company to affect the performance and valuation of another.
As a result, under the new structure, the bank’s assets are separated from non-banking activities,” she said.
The bank’s chief executive and group chief executive, Herbert Wigwe, has appreciated shareholders for their support since 2002, when he and Aigboje Aig-Imoukhuede took over the bank.
“Whether at the AGM, EGM or court-ordered meetings, our shareholders have always been behind us over the past nearly 20 years,” he said, noting that the new structure was designed to build a great future for the institution as the bank is spread from country to country. He pointed out that the HoldCo structure was necessary for effective control of the subsidiaries, which are located in around twenty different countries.
One of the possible drawbacks of the new structure is that it involves the creation of three different sets of boards at the HoldCo, bank and subsidiary levels, which has financial implications. But Wigwe said an expensive board could not be compared with weak governance and “believes shareholders should have a long-term view of the business”.
”Since 2002, we have become the largest bank in the country in terms of assets and customers. In the UK we are one of the best banks in the country. We are in a UK clearing house. But when we were about to go to the UK, some weren’t enthusiastic about it. Likewise, over the next five years, our presence in South Africa will be equally impactful and successful,” he said.
Dr. Farooq Umar, a shareholder, said the HoldCo structure would improve business diversification and share price appreciation. Another shareholder said: “This is a welcome development in the interest of the bank, shareholders and other stakeholders, as it will enhance the growth and expansion of the bank in the years to come.” .