Analyse the strategic and financial motivations and implications for merger in April 2019 between two of Nigeria's commercial banks, Access Bank and Diamond Bank, to become the largest bank of Africa...

Running Head: CORPORATE FINANCE         1
CORPORATE FINANCE        8
CORPORATE FINANCE
Table of Contents
Brief Overview of Both banks    3
Access Bank    3
Diamond Bank    3
Strategic Motivations    3
Access Bank    3
Diamond Bank    4
Financial Motivations & its Implications    4
Access Bank    4
Diamond Bank    5
Financial Report of Diamond Bank    5
Financial Report of Access Bank    7
Merger of Two Banks    7
References    8
Brief Overview of Both banks
Access Bank
Access Bank is considered to be an operational commercial bank that operates its various services through its respective
anches located in some of the major cities. Some of the countries, where the bank has its operations, include Nigeria, the United Kingdom as well as the sub-Saharan states of Africa, along with the representatives of China and India. The Access Bank serves in four major activities or markets that are into Corporate and Investment Banking, commercial for personal and business banking (Day, 2008).
Moreover, the bank has more than 832,000 shareholders, which comprise of International Institutional Investors (III’s) and several Nigerian investors who had been enjoying the consistent and successful growth and banking trajectories in the past 12 years. Further, it had been within the top 20 banks of Africa. Furthermore, the Access Bank mainly focuses on business practices that are socially relevant and profitable.
Diamond Bank
Diamond Bank is known to be the pioneer of retail banking in Nigeria, which has committed its services for giving some of the most prominent solutions to their loyal customers. The Diamond Bank had been providing services in retail, corporate banking systems, banking products and banking segments. Before going to the public, with an initial public offer (IPO), in 2005, the Diamond Bank took part in a highly successful event for Private Placement (Krishnamurti & Vishwanath, 2008).
The term ‘Beyond Banking’ was first introduced by Diamond Bank. The purpose of the organization was to drive the financial institutions with an enhanced customer experience utilizing some of the best technologies and innovations. The Diamond Bank had been promoting digitally focused proposition, which was related to and at par with the consumer trends as well as Nigerian Lifestyle.
Strategic Motivations
Access Bank
The Board of Access Bank organization had received a ‘no objection’ from the Central Bank of Nigeria and it continues the banking operations in the year 2019. The shareholders and the other regulators had approved that the transactions were complete, which were subjected under Access Bank according to the National Pension Commission (Pen Corn) and according to the Federal High Court (FHC). Among the 12 continents, three spanned around 28 million customers under the Tier 1 category of Nigerian Bank.
In March 2019, certain transactions concluded via ‘Scheme of Merger’ under certain approved terms. Besides, the FHC and Pen Corn approvals were expected to end before H1 2019, which were also subjected to shareholder approvals. Furthermore, the revenue and balance sheet synergy, which was given by the joint implementation committees, are also subjected to evaluation. The pre-tax will be fully applied within the post-completion of three years and it was estimated at around NGN30 billion per annum for conservative cost synergies.
Diamond Bank
The capital position of merger and Pro-forma was along with the regulatory requirements for the Diamond Bank. The bank was observed to be a significant financial institution with full compliance with international banking operations (Kulich & Ryan, 2017). In order to meet the international standards and to ensure a robust capital buffer, Diamond Bank has agreed to achieve a post-completion Capital Adequacy Ratio (CAR) with strategic capital management. This will be achieved at the bank level of 22% and a group level of 20% respectively.
By obtaining the regulatory approvals from Tier 2 and issuance of capital, the bank will be raising approximately US$250 million. This will be available for the drawdown, which has already been finalized. The further requirements, which were related to the...