In line with global best practice, one of the nation’s biggest banks,
Access Bank Group is to be restructured into Access Holding Company, a non-operating financial holding company structure.
The holding company would serve as the parent company for the banking group consisting Access Bank and its many subsidiaries.
The restructure is being implemented through a Scheme of Arrangement in accordance with the Section 715 of CAMA and the SEC Rules and Regulations.
The restructuring has been approved by the bank’s shareholders who voted during a court-ordered meeting in Lagos on Thursday in support of the Scheme.
The shareholders and directors who spoke of the benefits of the restructuring said they were optimistic the bank was set on the path of greater growth in the years ahead.
Board Chairman, Ajoritsedere Awosika, said the restructured group would have a ‘’structure like that of some major global financial institutions, including those Access Bank considers to be its peers and competitors’’.
Under the new structure expected to take off in the New Year, a parent company, Access Holding Company, would hold 100 percent shares of Access Bank Nigeria and 100 percent shares of all non-banking subsidiaries of the bank.
Details of the restructuring includes that Access Bank Nigeria would own all its 15 banking subsidiaries and all 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.
Also, the Chairman of the bank listed seven key benefits of the new structuring, including regulatory fulfilment in which the Holding Company structure would ensures full compliance with the Central Bank of Nigeria (CBN)’s Regulation on the Scope of Banking Activities and Ancillary Matters, 2010.
This regulation, she said, limits the business activity of a bank to strictly commercial banking business, and allows such non-banking businesses to be transacted through subsidiaries owned by the Holding Company.
The new structure also facilitates the bank’s growth and expansion across Africa.
Due to its oversight functions, the Holding Company structure would facilitate the growth of the banking group and expansion of services into underpenetrated regions in Nigeria, Africa and beyond.
Besides, the Chairman said the new structure would also enable Access Bank to diversify its business portfolios into new areas within the financial service industry permissible by the CBN.
It will also ring-fence each business of the bank from the risks of the other, by preventing the business performance of one business from affecting the performance and valuation of another.
Under the new structure, the assets of the bank would be ring-fenced from the non-banking businesses.
The Holding Company structure would facilitate a consolidated financial strength of the Group, to improve access and ability to raise capital with benefits, including lower transaction costs, amidst others.
It would also expedite capital and liquidity growth, and provide flexibility to accommodate leverage with minimal risk to regulatory rations.
“This structure would unburden the bank from oversight functions and responsibilities of managing the subsidiaries and ensure the bank is solely focused on its core operations. This fosters decision-making and business growth,” the Chairman said.
During the meeting, some shareholders commended the Board for the new structure, which they agreed would engender greater business opportunities for the group.
Farooq Umar said the Holding Company structure would enhance business diversification and share price appreciation.
“The new structure will insulate one subsidiary from the other. If one underperforms, the others would not be affected. This is a welcome development in the interest of the bank, shareholders and other stakeholders as it will strengthen the growth and expansion of the bank in the years to come’’, she said.
The bank’s Group Managing Director & Chief Executive, Herbert Wigwe, thanked the shareholders for their support since 2002 when he and Aigboje Aig-Imoukhuede took over the bank.
‘’Whether at AGM, EGM or court-ordered meetings, our shareholders had always been behind us in the last almost 20 years’’, he said.
He said the new structure of the bank was designed to build a great future for the institution as the bank is spreading from one country to another in different continents.
The Holding Company structure, he said, was necessary for effective supervision of the subsidiaries located in about 20 different countries.
On some of the drawbacks of the new structure, he said, the establishment of three different sets of Boards of Directors at the Holding Company, bank and subsidiary levels, and has some cost implications.
To this, Wigwe said the benefits of the new structure outweigh whatever costs would be incurred.
‘’I think shareholders should take a long term view of the business’’, he said. ‘’Since 2002, we have become the biggest bank in the country in terms of assets and customer base. In UK, we are one of the best banks there. We are in clearing house in the UK. But when we were about to go to the UK, there were those who were not enthusiastic about it.
“Similarly, in the next five years, our presence in South Africa will be equally impactful and successful’’, said the chief executive.
On the involvement of the bank in the renovation of the National Theatre in Lagos, the GMD said the project would be completed before the end of next year, to create thousands of jobs for the people.