Access Bank gains $2m on buyout of Tanzanian lender, poised for innovative banking solutions

*Nigeria’s Access Bank Plc secures a N3.3 billion ($2 million) gain on the acquisition of the African Banking Corporation Tanzania (ABCT) Limited in a transaction the banking group earlier initiated May 31, 2024, through a three-year deferred payment plan

Isola Moses | ConsumerConnect

Nigerian Access Bank Plc has secured a N3.3 billion ($2 million) gain on the acquisition of the African Banking Corporation Tanzania (ABCT) Limited in a transaction, which the banking group earlier initiated May 31, 2024, through a three-year deferred payment plan.

Analysts have projected this development will position the bank as a top-tier player in the country, as it is poised to deliver a robust range of innovative banking solutions.

Disclosures from the company’s latest interim financial statements for the six months to June 30, 2024, indicated that the Pan-African lender would pay N23.3 billion ($14.16 million) for the 97 percent shareholding in the Tanzanian lender, compared to the fair value of the net assets at the time of acquisition of N26.6 billion ($16.17 million), translating into a bargain purchase of N3.3 billion ($2 million), The East African report said.

The bank reportedly stated: “The Group acquired 97 percent of the share capital of African Banking Corporation (Tanzania) Ltd on May 31, 2024.

“The fair value of the consideration and net assets at acquisition were N23.3 billion and N26.6 billion respectively, resulting in a provisional gain (bargain purchase) of N3.3 billion.

“This is a deferred consideration as payment is not due until three years’ time.”

A bargain purchase occurs when a firm is purchased at a lower value than its fair market value, and this kind of transaction usually, occurs when a business is in a crisis.

A deferred payment is described as a payment plan that allows repayment of a debt at a future date without interest accruing.

Access Bank poised for ‘World’s Most Respected African Bank’

Access Bank Plc, listed on the Nigerian Stock Exchange (NSE), first announced the deal to acquire majority equity stake in ABCT Limited, a subsidiary of London-listed Atlas Mara Limited (ATMA), an Africa-focused special-purpose acquisition company with stakes in different banks across the continent July 14, 2023.

Besides, the banking group also acquired 100 percent of the share capital of the African Banking Corporation Zambia Limited indirectly through another subsidiary entity, Access Bank Zambia Limited January 5, 2024, report stated.

It was learnt Access Bank views its entry into the Tanzanian market as “a major boost to its vision of becoming the World’s Most Respected African Bank.”

Roosevelt Ogbonna, Group Chief Executive of Access Bank Plc, had said of regulatory filings to the Nigerian Stock Exchange (NSE) dated June 10, 2024, that “this strategic move represents a notable step towards setting a railroad in Tanzania for intra-African trade within the East African region, Africa and the rest of the world.”

The Access Bank Chief also stated: “It underscores our commitment to creating a robust East African banking network, driving positive change and innovation.

“We are excited about the opportunities this acquisition presents for our operations in Tanzania and are eager to leverage our combined strengths to deliver exceptional financial solutions and experiences to our customers.”

Following the completion of the Transaction, ABCT will be merged with the consumer, private, and banking business of Standard Chartered Bank Tanzania to be acquired by the bank to establish Access Bank Tanzania as an enlarged entity within Tanzania’s banking landscape.

This combination, according to report, is expected to position Access Bank Tanzania as a top-tier player that is poised to deliver a robust range of innovative banking solutions that would meet the diverse needs of its customers in the country.

Speaking on the deal, John Imami, Managing Director of ABCT Limited, was quoted to have said: “The completion of our transaction with Access Bank Plc, not only underscores the strong confidence of Access Bank in our operations and the Tanzanian market but delivers new and exciting opportunities for our customers, employees, and stakeholders.

“The new entity is poised to enhance our service offerings, leveraging Access Bank’s extensive resources and expertise to deliver even greater value to our clients.

“We look forward to an exciting and prosperous future as part of the Access Bank family, driving economic growth and financial inclusion across Tanzania.”

It is also recalled that Access Bank Plc (Access) and Standard Chartered Bank, August 2023, had entered into agreements for the acquisition of the British lender’s majority shareholding in its subsidiaries in Angola, Cameroon, The Gambia, Sierra Leone, and its Consumer, Private & Business Banking business in Tanzania subject to regulatory approval.

Access said the deal with the British lender —Standard Chartered Bank— presented a key step in its journey to build a strong global franchise focused on serving as a gateway for payments, investment, and trade within Africa and between Africa and the rest of the world.

Access Bank, January this year, also announced a deal to acquire 80.88 percent shareholding in Uganda’s Finance Trust Bank, and in March 2024, entered into a binding agreement with KCB Group Plc for the acquisition of the entire issued share capital of National Bank of Kenya Limited (NBK) from KCB.

In 2020 the lender completed the acquisition of Kenya’s transnational bank and acquired an additional 16.22 percent shareholding in its Rwandan subsidiary valued at $9.55 million to strengthen its position in the East Africa region.

The investments increased Access Bank’s shareholding in the Rwandan Subsidiary to 91.22 percent from 75 percent while laying a firm grip on the Kenyan subsidiary with a 99.98 percent shareholding, report said.