Access Bank will soon id proposing to transit to a holding company, Access Holdings Plc was part of the company's strategy to diversify its business portfolios into new areas within the financial service industry that are permissible by the Central Bank of Nigeria (CBN) HoldCo regulation. In a letter to shareholders by its Chairman, Ajoritsedere Awosika, Access Bank Plc said the new Holdco structure would unburden the Bank from oversight functions and responsibilities of managing the subsidiaries and ensure the Bank is solely focused on its core operations. This fosters faster decision-making and business growth.
The bank said in the scheme of arrangement, which is expected to be presented to shareholders on December 16, at a court ordered meeting for approval that the restructured group will have a structure like that of some major global financial institutions , including those that Access Bank considers to be its peers and competitors. "The Board expects that the restructured group will have greater flexibility to adapt to future business opportunities, market and regulatory changes than is currently the case," the bank chairman stated. She listed some of the gain of the Holdco structure as: Regulatory compliance: The HoldCo structure ensures full compliance with CBN's Regulation on the Scope of Banking Activities and Ancillary Matters (Regulation 3), 2010, (which repealed the Universal Banking Guidelines and limited the ability of banks to undertake non-banking business), and Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria, 2014. Facilitation of growth and expansion in banking across Africa: Due to its oversight function, the HoldCo structure will facilitate the business growth of the banking group and expansion of services into underpenetrated regions in Nigeria, Africa and beyond.
Diversification into permissible financial services: The HoldCo structure will enable Access Bank to diversify its business portfolios into new areas within the financial service industry that are permissible by the CBN HoldCo regulation. Risk management: The HoldCo structure would ring fences each business from the risks of the other, by reventing the business performance of one business from affecting the performance and valuation of another, Accordingly, under the HoldCo structure, the assets of the bank are ring-fenced from the nonbanking businesses. Ease of funding: The HoldCo structure will facilitate a consolidated financial strength of the Group, which will improve access and ability to raise capital with benefits including lower transactions costs, amidst others. Capital allocation:
The HoldCo structure will expedite capital and liquidity, and provide flexibility to accommodate leverage with minimal risk to regulatory ratios. Speed of decision making: This structure would unburden the Bank from oversight functions and responsibilities of managing the subsidiaries and ensure the Bank is solely focused on its core operations. This fosters faster decision-making and business growth.
Culled Global Financial Digest
