Access Bank Completes Acquisition of Tanzania’s BancABC, Consolidates East African Operations
Fitch Ratings upgrades Coronation Merchant Bank to 'B-’, stable outlook
Access Bank Plc has announced the successful completion of its acquisition of African Banking Corporation Limited (BancABC) Tanzania, aligning with its strategic expansion goals across Africa.
The milestone, it said, followed the initial announcement in July 2023, representing another step in its journey to becoming the world’s most respected African bank.
Access Bank noted that following the acquisition, BancABC Tanzania’s operations will be integrated with the consumer, private, and business banking operations of Standard Chartered Bank, Tanzania. The merger, it stressed, will result in the formation of a new entity, Access Bank Tanzania.
Access Bank in a statement noted that this furthers its aspiration to be a strong player within the East Africa region, while adding greater depth and breadth to its pan African operations.
In addition, it stated that it was creating more significant opportunities for financial inclusion, diversified product range and enhanced customer experience.
Access Bank’s presence in over 22 countries presents a robust platform that can be leveraged to boost intra and inter Africa trade and payments, it said.
Commenting on the acquisition,
Access Bank’s Managing Director/ Chief Executive Officer, Roosevelt Ogbonna, stated: “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.
“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.”
Also commenting also on the transaction, Managing Director, African Banking Corporation (Tanzania) Limited, John Imani, said: “The completion of our transaction with Access Bank, not only underscores Access Bank’s strong confidence in our operations and the Tanzanian market but brings 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.”
Meanwhile, Fitch Ratings yesterday upgraded its Long-Term Issuer Default Rating (IDR) to ‘B-‘ from ‘CC’ and its Viability Rating (VR) to ‘b-‘ from ‘cc’ for Coronation Merchant Bank.
Additionally, the Bank’s National Long-Term Rating has been upgraded to ‘BBB-(nga)’ from ‘B+(nga)’, with the outlooks on the Long-Term IDR and National Long-Term Rating rated stable.
The significant upgrade, the agency said, reflects the robust improvement in the Bank’s capital position, following the completion of a rights issue and the sale of foreign currency-denominated equity investments.
In the other relating Fitch upgrade for Coronation Merchant Bank, it stated that the substantial upgrade reflects the agency’s view that funding instability risks have receded, due to the strengthening of Coronation Merchant Bank’s capital base.
This assessment, it noted , is also attributed to an improvement in the Bank’s core profitability, aided by the softening of the Cash Reserve Ratio (CRR) regime for merchant banks.
The rating agency further remarked: “Coronation Merchant Bank Limited’s Issuer Default Rating (IDR) is driven by its standalone creditworthiness, as expressed by its VR of ‘b-’.
“The Viability Rating (VR) balances the concentration of Coronation Merchant Bank’s operations in Nigeria’s challenging operating environment, a niche franchise and business model, high credit concentrations, moderate capitalisation and its reliance on short-term wholesale funding against good asset quality metrics.”
In addition, Fitch highlighted the Bank’s strong asset quality metrics, noting that “despite challenging macroeconomic conditions, Coronation Merchant Bank has recorded no impaired loans since converting to a merchant bank in 2015, reflecting its prudent underwriting standards and risk controls, and the lower-risk nature of its trade finance loans.”
Commenting on the upgrade, Deputy Managing Director of Coronation Merchant Bank, Paul Abiagam, said: “Our unique four-step upgrade in both ratings by Fitch is a testament to the progress the board & management have made in directing and executing strategic initiatives.
“These have effectively reinforced our financial stability and operational resilience. It reflects the hard work and dedication of our entire team and underscores our shared devotion to maintain high standards of financial management and deliver exceptional value to our stakeholders.”
The bank in the statement noted that the upgrade reflects the testament to its founder, Aigboje AigImoukhuede’s vision and leadership for Coronation Merchant Bank which remains focused on leading Africa’s merchant banking subsector.