Nigeria’s Securities and Exchange Commission (SEC) has approved the merger of Access bank and Intercontinental bank. The merger scheme will now go to shareholders for consideration and final approval.
Sources close to drafting of the scheme say all the existing shareholders of Intercontinental Bank were accommodated and given five per cent stake in the new bank that will arise from the combination of Intercontinental and Access Bank.
The scheme of the proposed combination will be presented to shareholders for approval in a court sanctioned Extra Ordinary Meeting EGM. Sources close to the merger scheme say the shareholders are likely to approve the move.
The approval by the shareholders will lead to Access Bank becoming the core investor with about 60 per cent stake while Asset Management Company of Nigeria, AMCON, will have 35 per cent.
In mid-2009 the Central Bank of Nigeria declared Intercontinental Bank and several others insolvent, following a special examination by the Central Bank.
It subsequently sacked with immediate effect the Managing Directors and Chief Executives of five banks including that of Intercontinental Bank Plc. Its acquisition by Access Bank is expected to lead to the emergence of a financial institution that could be one of the largest in Africa.
The bank still requires recapitalization, which is now expected to come by way of Access Bank’s investment. As the September 30 deadline, given by the Central Bank of Nigeria to the rescued banks to fully recapitalize approaches, the bank is expected to inject over 500 billion from the Asset Management Corporation of Nigeria and Access Bank Plc to save the bank.
Additional funds are expected to be injected to fully clean the bank’s balance sheet. Prior to its fall, Intercontinental Bank was in 2007 adjudged by the Banker magazine, a subsidiary of the Financial Times of London, as the second fastest growing bank in the world.
It was also ranked as the biggest bank in Nigeria, number five in Africa and the 355th largest bank in the world, going by first tier capital. The ranking made Intercontinental Bank the first in Nigeria to be rated among the world’s top 500 banks.
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