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Intercontinental Bank Set to Merge with Access Bank
28 Mar 2011
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Sanusi Lamido Sanusi, CBN Governor


By Kunle Aderinokun and Obinna Chima

The stage appears set for the fusion of Access Bank Plc and Intercontinental Bank Plc as the management of both banks disclosed Sunday that they have signed a Memorandum of Understanding (MoU) for the purpose of their merger.

A statement that was jointly signed by the Company Secretary of both banks and made available to THISDAY, explained that the business combination would result in the emergence of one of Africa's largest financial institutions.

It stated that the MoU signing followed the completion of a competitive, rigorous and transparent selection process and the approvals of the Board of Directors of both banks.

It would be recalled that the CBN had in 2009 declared Intercontinental bank and eight other banks unhealthy and were said to be dangerously close to collapse. The exercise was geared towards sanitising the banking industry. This led to the removal of the Chief Executives of the affected banks including that of Intercontinental bank; Mr. Erastus Akingbola.

The apex bank had fixed a June deadline for the recapitalisation of the rescued banks The statement explained: “The business combination will offer unique opportunities for both institutions.

The Retail banking operations of Intercontinental Bank coupled with the Wholesale and Commercial banking strength of Access Bank offer a high degree of synergy and complementarity; unique in the Nigerian banking environment. The synergy from combining the two banks will therefore create a formidable competitor with scale to rival the top banks in the industry.

“We note that the careful consolidation of the banking sector is essential to the future stability and growth of the Nigerian economy. The combination of Access Bank Plc and Intercontinental Bank Plc is of systemic importance and safeguards a significant degree of capacity in the Nigerian banking sector that would otherwise be lost in the event of non resolution of any of the rescued banks. Critically, the Transaction provides a safe harbour for the depositors of Intercontinental Bank Plc and the seamless continuation of banking services to Intercontinental Bank's considerable customer base.”

THISDAY check showed that as at Friday, Intercontinental Bank had a total market capitalisation of N27. 913 billion and a share price of N1.48 per share. At the end of last year, its shares were 86 percent free float and 14 percent held by the directors.

On the other hand, the share price of Access Bank Plc stood at N8.64 per share as at Friday, with a total market capitalisation of N154.554 billion.

The statement further stressed that the resulting footprint of the combined entity and its increased access to low cost deposits combined with Access Bank's recognised competence in commercial banking, robust balance sheet among others, will create a market leading platform from which the combined entity can capitalise on growth opportunities.

In accordance with international best practices, it also pointed out that the process will be subject to necessary Shareholder, Regulatory and Judicial approvals.

Reacting to the development, the Group Managing Director and Chief Executive Officer, Access Bank, Mr. Aigboje Aig-Imoukhuede informed Reuters that the two institutions were a perfect match. But he however declined to give details on the terms of the deal.

Intercontinental is now the second out of the rescued banks to officially announce its recapitalisation plans after Union Bank last week said it had agreed to a $750 million deal with a consortium led by the African Capital Alliance private equity firm.

There are strong indications that other rescued banks such as Afribank Plc, Bank PHB Plc, Finbank Plc and Oceanic Bank International Plc that have also held talks with potential investors may announce their preferred suitors this week.