The scramble for Africa’s financial sector has witnessed a shift since the lockdown as more African financial powerhouses are strengthening their regional base by acquisition as an expansion strategy instead of mergers. This played out again with the recent acquisition of Mozambique’s African Banking Corporation by Access Bank Plc, one of Nigeria’s biggest banking institutions. Access Bank hopes to use the acquisition of the ABC to consolidate its operations in Mozambique into a single financial services unit, and hope that gaining new grounds will add bigger value to miles already covered after acquiring another banking asset in the Southern African region.

The deal was sealed by Access Bank Mozambique with the backing of London-listed financial services group Atlas Mara Limited. Access Bank has been working on expanding its non Nigerian market beyond its present level especially with more footholds in the SADC region. This acquisition comes after two other acquisitions in Zambia and South Africa so far delivered between the start of the year and now, and another one to be completed in Botswana by June.

Read also:Nigerian Fintech Startup BFREE Secures Seed Funding Round

An already cluttered market in its base, Nigeria, is pushing the country’s biggest bank by asset to seek growth in the rest of Africa at a time when the coronavirus crisis has grievously deteriorated credit quality and lenders still battle the headwinds of last year’s record crash in the prices of oil on earnings. Oil and gas contributes the bulk of the credit base of Nigerian banks.

With the Mozambican takeover, the bank’s combined assets from a proposed merger between Access Bank Mozambique S.A and the new acquisition will make it the seventh largest bank in the country.

“We are building the scale necessary to compete effectively and efficiently in key African markets outside Nigeria and ensure we sustainably deliver strong return on invested capital in our African expansion,” says the Group Managing Director, CEO of Access Bank, Mr Wigwe.

Read also:Access Bank Makes Expansion Statement With Takeover of South Africa’s Grobank

“Scale is an important contributor to returns and this transaction is consistent with our rigorous efforts to create to create a strong presence with scale across Africa.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

With over $13 billion worth of assets and over 27 million customers, Nigeria’s Access Bank looks like it is out for more. The biggest lender in Nigeria by total asset, which has also recently acquired another Nigerian bank, Diamond Bank Plc has just sealed a major acquisition deal with Kenya’s Transational Bank. With this, Access banking is announcing arrival across East Africa. The bank is also planning to set up its own banking infrastructure in other East African markets.

“As you all know Kenya has significant market share within the East African corridor and that is why we are going there. I think the idea is really not just about Kenya. As part of our five-year strategy we expect to be Africa’s gateway to the world and to drive international and global collaborations and that is what you see playing out with Kenya,” Access Bank Group’s Deputy Managing Director Roosevelt Ogbonna said in an interview with CNBC Africa. 

Here Is All You Need To Know

Access Bank Will Acquire 93.57 percent Shareholding In Transnational Bank

• The lender, is in the process of acquiring 93.57 per cent shareholding in Kenya’s privately-owned small sized lender Transnational Bank at undisclosed fee, with its eyes further cast on Tanzania and Uganda.
• The Kenyan transaction is expected to be concluded in the next 30 to 60 days subject to regulatory approvals.
• Access Bank expects to undertake trade financing through its UK office, leverage on its digital capacity and capabilities to create connections between customers and markets across Africa and to provide a platform called ‘Access Africa’ that allows both person-to-person as well as business-to-business transactions.
• The lender currently has over 10 million mobile customers who can start and terminate transactions through mobile phones in 19 African countries.
• Access Bank also has a presence in Rwanda, Ghana, Gambia, Sierra Leone, Democratic Republic of Congo (DRC), Zambia and the United Kingdom, with representative offices in Lebanon, India and China.
• Access Bank controls over $13 billion worth of assets and over 27 million customers.
• The bank has drawn a five-year plan (2018–2022) that seeks to shore up its retail and wholesale banking business and position it as “the world’s most respected African bank.”
• The Nigeria Stock Exchange (NSE)-listed lender is also eyeing East Africa’s nascent oil and gas sectors, counting on it its track record in financing upstream and downstream fuel projects.
• Access Bank recorded 44 per cent growth in net profit to $250 million in nine months to September 30 this year, buoyed by growth in its retail and wholesale banking business.
• Other Nigerian banks operating in Kenya include United Bank of Africa (UBA) and Guaranty Trust Bank (GT Bank) which acquired 70 per cent shareholding in Fina Bank Group in 2013.
• The East African banking market is currently dominated by Kenya’s two-largest retail banks, KCB and Equity, with the recently concluded merger between NIC Bank and Commercial Bank of Africa (CBA) creating the third-largest lender in the region.

“If we are going to be Africa’s gateway to the world supporting intra-Africa as well as inter-Africa trade we have to be in Key markets within Africa and within the global space as well. And so Kenya is just one of the many key markets in Africa where we are seeking to take opportunity,” he said.

Read also: Kenya ’s Largest Bank Enters Asian Market In A Deal With Japan’s SMBC

More Acquisitions On The Table

The bank is looking for more acquisitions across Africa while also planning to set up its own banking infrastructure in other markets.

“As we spread and look at opportunities across Africa, some might be greenfield others might be emanating opportunities that we see we could take advantage of,” said Mr Ogbonna.

Access Bank’s increased focus on retail banking comes as a survey conducted by McKinsey & Company last year (2018) showed that the retail market — people earning less than $417 per month — will be the driving force of African banks from 2017 to 2022, and expensive banks will be rejected by these customers.

The survey also revealed that retail customers are extremely sensitive to prices of financial products and are also keen to select banks that offer them convenience in terms of accessing financial products and services.

It is estimated that Africa’s banking revenues will grow by 8.5 per cent per annum from 2017, bringing the continent’s total banking revenues to $129 billion in 2022, of which $53 billion will be from retail banking.

Over half of the retail banking customers sampled, however, singled out pricing as their primary reason for selecting a bank, followed by convenience in terms of quality of services and proximity of the bank to customers.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world