The sanctioning of the Diamond and Access bank merger by the Federal High Court Tuesday has signed off on the 29-year life of the latter.
Trading on the shares of Diamond Bank, which was founded on 20 December 1990, was also suspended on the floor of the Nigeria Stock Exchange (NSE).
Diamond Bank’s shares will hence be dissolved without being wound up and delisted from the Exchange afterwards.
The merger will see the dissolution of 19 per cent of the now absorbed bank’s share portfolio.
Diamond Bank will transfer all its assets, liabilities and undertakings to Access Bank and the entire issued share capital of Diamond Bank will be cancelled and the Bank will be dissolved without being liquidated.
Diamond Bank’s shareholders will get a cash consideration of N1 per share and two ordinary shares of the enlarged Access Bank for every seven ordinary shares of Diamond Bank held as at the effective date. All these are in line with the terms of the merger, which was sealed with the FHC approval.
Emerging from the union is an expanded Access Bank, headed by an unchanged Group Managing Director, Herbert Wigwe.
“The suspension is required to prevent trading in the shares of the bank in order to determine the bank’s shareholders who will qualify to receive the scheme consideration,” NSE said, referring to the ‘cash consideration.”
The fusion of both money lenders is expected to form a leading Tier 1 Nigerian bank and the largest bank in Africa by number of customers, with networks across three continents, 12 countries, 3,100 Automated Teller Machine (ATM), over 33,000 Point of Sale (PoS) terminals, 27 million clients and over 10 million mobile customers.
There is a challenge of economies of scale, however, which may inevitably lead to the firing of staff.
At a press conference in December, Herbert Wigwe said staff of Diamond Bank would not be laid-off, but re-skilled. That will be one word to watch out for in the coming months. What is evident no doubt, is that only one management team will be in place for the purpose of efficiency and overlapping branches and departments will have to be collapsed.
Based on year ending financial statements for December 2017, Access Bank, the ‘absorber,’ has 3,190 staff in over 300 branches, while Diamond Bank has 3,280 in 279 branches. Its number of branches was reflected in its nine-month result for 2017. With a staff difference of 90, experts expect some haircut on the Diamond Bank side of the deal.
Diamond Bank is not the first money lender gobbled up by Access bank. Following the absorption of Intercontinental Bank in 2012, over 1,000 of the now defunct bank’s staff were laid-off and branches were closed.
Experts also say quick-fire retrenchments will not be the mode of operation, due to the workers’ unions in the banking sector.