Access bank’s proposal to Atlas Mara about its baby BancABC
While likening a hard-driven business acquisition to romance can be a fuzzy affair, it looks like the Nigerian suitor courted the maiden in Botswana who is likely to assume a new name after the bride price is fully paid and all the nuptials are finalised. And, according to the head of the West African party, there will be enhancements throughout the life of the union. Staff Writer KITSO DICKSON reports
“It’s almost like a marriage. Did you go to meet the girl or she came to meet you or it was a family introduction?” Access Bank CEO Herbert Wigwe responded thus to a question from The Business Weekly & Review on Tuesday lastweek in Gaborone seeking to establish how the opportunity to buy a major stake in one of Botswana’s top five banks attracted the attention of a bank headquartered in Nigeria.
“We went to meet the girl out of our own love in this case,” Wigwe went on. “So we approached the owners and said what we could do with this franchise given what you are going through now. Given the nature of the former owners, they are not bankers per say. We are a large retail bank and our perspective of what we are doing is to build, buy and be part of a group forever. It’s a totally different mindset. We made the approach and were not approached by anyone else.”
This is the CEO who was named African Banker of the Year at the 2020 African Banker Awards. As part of the Atlas Mara overall and ongoing strategic review announced on the London Stock Exchange, Atlas Mara considered various options, including this unique opportunity to bring in a new world-class partner for Botswana, its people and economy, while realising value for its ownership stake in BancABC Botswana for its stakeholders.
At the end of the day, for most owners who have significant proportion, there are a couple of things that guide decision making, Wigwe said. He outlined one as being a large institution that can help in the further development of the brand. “It’s like having a baby, if you want to travel you will look for the appropriate person to hand over the baby to,” Wigwe said, adding that the idea is to look for an institution that will enable you to take the brand to the next level. “It's not just about price; it’s about looking for an institution that can bring more capital into Botswana.”
Through this acquisition, said Wigwe, money will flow into the country, hence it is ideal to have an investor keen on developing the market and bringing money into the system. “All of those things are the considerations that led the existing owner to say Access Bank is the preferred bidder,” he said while responding to another question on whether the existing owners of BancABC had offered the same opportunity to other investors, especially local investors.
BancABC Botswana has achieved a great deal under Atlas Mara and now believes that Access Bank will propel it to its best and next phase of growth. The Bank of Botswana has approved the transaction that will result in an effective transfer of the strategic ownership and controlling interest of BancABC Botswana to Access Bank.
Dr. Seamogano Mosanako, Head of Communications and Information Services at the Bank of Botswana (BoB), says Access Bank has been evaluated to meet the licensing requirements to take over BancABC and operate locally and that the transaction was assessed to be proper and procedural. “The remaining aspects that account for the conditional approval relate to completion of administrative processes pertaining to a few regulatory requirements towards consummation of the transaction,” she told this publication. But that notwithstanding, Dr. Mosanako added, BoB can state that applications for mergers and acquisitions are assessed in accordance with the requirements of the Banking Act, the Licensing Policy and Basel Core Principles for Effective Banking Supervision.
In that regard, the assessment encompasses evaluation of the following aspects: resultant ownership structure and governance; fitness and probity of board members and senior management officials of the proposed acquirer, including expertise and integrity; the financial strength of the proposed acquirer and its ability to provide additional capital if required; strategic and operating plans of the resultant bank; risk management and internal controls; and the projected financial condition of the resultant bank, she explained.
“In the case where a proposed acquirer is a foreign bank, the home supervisory authority of the acquirer ought to issue a statement of no objection to the proposed acquisition,” Dr. Mosanako said, adding that overall, “any acquisition of a bank operating in Botswana, the acquirer should serve the interest of the public, be viable and preserve healthy competition and stability of the banking system”.
The BancABC transaction is expected to conclude in the first half of 2021. Wigwe says Access Bank wants to have homogeneity by Q3. Regarding which brand they will use, he answered: “You will normally get strong branding experts to do a valuation of two brands and decide how it looks. When we did Diamond Bank, I’ve never seen a brand so loved by their customers in my life despite the fact that they had issues.”
According to the decorated Nigerian banker, the brand was so loved that even though the bank was having difficulties, they wanted it to remain the way it was. “At the end of the day, we have presence in the entire region. How do we make existing customers feel that they are part of the family? We will speak to them. We will get brand evaluation and brand experts. If we use the brand as it is, how do we introduce it in such a way that the existing customer base will accept it?” he quizzed rhetorically before adding that chances are that “we will use the Access Brand as it is. We need to get them to adapt the brand and there are different ways to do it”.
Wigwe is aiming to make Access Bank a leading bank across different parameters of retail banking, including profitability, return on equity and balance sheet. “I took a lot of time to share our history to show you that it is possible,” he said. “I am not saying it is a walk in the park but it’s possible. We will do what is possible to get there. The building blocks have been created. We have built the right technology and the right capital requirement is to be put in.”
When BancABC listed on the BSE, it had a significant shareholding of Batswana, including pension funds. The public owns 22 percent. According to Wigwe, Access Bank would like to work with and have ownership and participation by local investors in the market. Asked about meeting the 30 percent minimum free-floating requirement, he responded: “we will work with the stock exchange and seek additional institutional investors to see if we can take it to that threshold required.”
Over time, after the bank has completed some of the work in the transition, that will be opportunity for Batswana to own an additional stake in the company, he said.