Shareholders of Access Bank Plc have approved the transition of the commercial banking group to a holding company (Holdco), Access Holdings Plc.
This approval and transition will enable the group to invest in non-banking subsidiaries, and ultimately, enable the group to expand into a global one-stop financial services group.
At the hybrid, court-ordered meeting held on Thursday, December 16, to global stakeholders at the bank’s head office in Lagos, shareholders approved the scheme document for the conversion to Holdco.
Access Bank’s Shareholders had earlier approved the idea and conversion process while the bank had also secured the crucial “no-objection” approval of the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN), leading to the order of the Federal High Court for yesterday’s final meeting of the shareholders for the approval of the scheme of arrangement for the conversion.
Under the transition arrangement, the entire issued share capital of Access Bank comprising of 35.545 billion ordinary shares of 50 Kobo each will be converted into the same shares of Holdco and distributed to all shareholders of Access Bank on the basis of one share of Access Bank in exchange for one share of the new Access Holdings Plc.
Thereafter, Access Bank Plc will be delisted and Access Holdings Plc will be listed on the Nigerian Exchange (NGX). The immediate members of the Holdco will be Access Bank and its subsidiaries including Access Bank (Gambia) Limited; Access Bank (Sierra Leone) Limited; Access Bank (Rwanda) Plc; Access Bank (Zambia) Limited; Access Bank (R.D Congo) S.A.R.L; Access Bank (Ghana) Plc; Access Bank (Guinea) S.A; The Access Bank (UK ) Limited; Access Bank (Mozambique) S.A; Access Bank Kenya Plc; Access Bank (South Africa) Limited; and African Banking Corporation of Botswana Limited.
The Holdco is, however, expected to make new major investment moves in the next few months, according to insiders with knowledge of board and management strategies.
The chairman of Access Bank Plc, Ajoritsedere Awosika said that the restructuring of the banking group into a Holdco will enable the group to have a structure like that of some major global financial institutions, including those that Access Bank considers being its peers and competitors.
According to Awosika, the board expects that the restructured group will have greater flexibility to adapt to future business opportunities, market and regulatory changes than is currently the case.
She also stated that the restructuring was necessitated by several rationales including the need to comply with regulatory requirements, growth and expansion, diversification, risk management, ease of funding, capital allocation, and speed of decision making.
According to her, the Holdco structure ensures full compliance with CBN’s Regulation on the Scope of Banking Activities and Ancillary Matters (Regulation 3) 2010, which repealed the Universal Banking Guidelines and limited the ability of banks to undertake non-banking business, as well as Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria, 2014.
“Due to its oversight function, the Holdco structure will facilitate the business growth of the banking group and expansion of services into underpenetrated regions in Nigeria, Africa and beyond.
“The Holdco structure will enable Access Bank to diversify its business portfolios into new areas within the financial service industry that are permissible by the CBN Holdco regulation.
“The Holdco structure would ring-fence each business from the risks of the other, by preventing the business performance of one business from affecting the performance and valuation of another, Accordingly, under the Holdco structure, the assets of the bank are ring-fenced from the non-banking businesses,” Awosika said.
She added that the new structure will facilitate a consolidated financial strength of the group, which will improve access and ability to raise capital with benefits including lower transactions costs, amidst others.
According to her, the Holdco structure will also expedite capital and liquidity, and provide flexibility to accommodate leverage with minimal risk to regulatory ratios.
“The board considers the restructure to be the most appropriate approach to create greater strategic flexibility and diversification of the group’s revenues.
“The restructure will result in shareholders holding shares in the Holdco in the same proportion as their current holdings in the bank and the bank’s shares being held wholly by the Holdco, which will be a regulated entity for CBN purposes.
“The bank will continue to be subject to the full suite of CBN banking regulations and, in all other material respects. The banking subsidiaries will continue to be subject to the oversight of the respective prudential regulatory authorities in their jurisdictions. The group’s firm-wide risk management framework will continue to apply across the entire restructured group,” Awosika said.