Bloomberg and local news have reported that Access Bank had acquired Diamond Bank in Nigeria. It is a very painful one, personally, because Diamond Bank seeded my career. As I have written, it was the only company I ever-interviewed in Nigeria, and the only one I sought employment: other jobs had come without applications or interviews. With a category-king leading innovative spirit, Diamond Bank was a peerless institution at its peak. It pioneered Nigeria’s modern banking with the best banking product ever in Nigerian history. Yes, the Diamond Integrated Banking System (DIBS) transformed Nigeria and solved the menace of armed robbery against traders than all the contributions of Nigerian Police. Yet, the Diamond lost the sparkle.
Nigeria’s Access Bank Plc agreed to take over struggling local rival Diamond Bank Plc in a deal worth about $200 million that would create the nation’s biggest lender by assets. Both companies’ shares rose.
Access will buy Diamond for 3.13 naira a share, with almost a third of that, or about $64 million, being paid for in cash and the rest in shares, the Lagos-based lenders said in statements to the Nigerian stock exchange on Monday. That’s more than triple Diamond’s previous closing price.
Carlyle Group, the U.S. private-equity firm, bought almost one-fifth of Diamond in 2014, its first-ever Nigerian deal. Since then, the value of the stake has tanked amid an economic slowdown in the oil-driven economy that sent bad loans soaring. The lender was downgraded by both Moody’s Investors Service and S&P Global Ratings last month to triple-C.
“The merger will be a positive for Access Bank,” Lagos-based CSL Research said in a note to clients. “Diamond Bank has a strong retail franchise, especially on the liability side, giving it the lowest funding cost among peers.”
I cannot write much because I am biased on this topic. I am not sure that I can be fair and balanced here. Yes, when a company funded your degrees and extended that favor when you had left, it is evident any commentary here would not be based on reality. But get this from me – I truly know that I am a small boy. Had I been super-rich, I would have sent a cheque of $200m (the amount Access Bank is paying) to keep Diamond Bank alive. But this goes beyond Diamond: can Nigeria build durable companies?
In a cocktail few years ago, I had the privilege of speaking before global business leaders. My business mentor, Tony Elumelu, who continues to support, gave me that opportunity. After I finished my oration that evening, a lady came to me. She was Lady de Rothschild, the chief executive officer of E.L. Rothschild, a leading independent wealth management firm in the United States with real estate, agricultural and food interests. She gave me her card and asked me to write her. But while we were talking, she dropped a sentence: her family business had celebrated its 200th year of operation! Yes, the company was founded in 1811 and is still operating in many incarnations today.
This is a national business tragedy!