The Access Bank Playbook

The Access Bank Playbook

Access Bank Plc Nigeria is rumored to be in talks to acquire some assets of Atlas Mara which is exiting some markets in Africa. According to Bloomberg, Access plans to buy Atlas Mara properties in Botswana, Zimbabwe, and Zambia. It would be interesting to see how that plays out. Why? Former Barclays boss who ran Atlas Mara evidently overpaid in some of these African businesses. So now he wants to sell, would Access get its usual bargain hunting deals, in which it typically pays largely nothing, for extremely vital properties like defunct Diamond Bank? 

And the big one: Access Bank wants to be in 22 African countries by 2025. It has a really long way to go. It is already the largest bank in Africa by customer base. But its market cap remains less than N300 billion even when GTBank Plc is hitting close to N1 trillion and Zenith Bank N740 billion.

Sure, there could be a strategy: have operations in most African countries for the emerging AfCTFA era, and using that, position the bank as the African bank. That is largely UBA’s playbook. Yet, UBA is worth just N280 billion which does imply that the spread has not unlocked leverageable factors for the bank.

Mr. Herbert Wigwe, Access boss, is a brilliant businessman; I wish him and the bank good luck. But he needs to calibrate if there are leverages on running banking operations in Zambia and Zimbabwe, going against battled-tested local players.

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6 thoughts on “The Access Bank Playbook

  1. So, with all the acrobatics, gymnastics and amalgam of paraphernalia, Access Bank market cap is still around six hundred million dollars? Well, the banks here are largely a conglomeration of buildings and logos, they neither create anything significant nor inspire anyone.

    What’s the difference between Access and UBA, just name and logo? They can as well expand to Middle East and the Caribbean, but cannot really win much there.

    The supposed glory of Nigerian banks begins and ends here, nothing much anyway.

    Reply
  2. Access and UBA pay very sizeable dividends on time. And that is evidence that the cash/earnings are real. They also both have Eurobond debt they are paying and on time – no default despite the global pandemic challenges and dollar shocks to the Nigerian economy. All these show them to be strong banks. Their balance sheets/their book value/their present market price show them to be super undervalued investment assets presently – a good thing for savvy investors to get all they can at this time. Sooner than later the market will realise that the market price for Access and UBA is a super give away. And with the 2 banks essentially being run by owner managers who have literally put their money where their mouth is, I believe their true value will reflect in the market ultimately.
    If Access is buying the African assets at under-value, (and when really is the right time to buy assets at cheap valuations than when the seller is not incentivised and in a time like now!)
    then I would not worry. Surprisinglyy, ETI that is doing very poorly in Nigeria, n the name of Ecobank, is doing great in Zimbabwe. And you would have thought – Zimbabwe of all places. I believe Access is on the right course. I will advise any person who cares to listen to load up on Access Bank and UBA. They and virtually all Nigerian Banks will be faced with NPLs no doubt – reflecting the times but these 2 banks as well as the other systemic banks have huge balance sheets/Net Assets to absolve same.
    Let us also give our top local banks some chance. The top South African banks and banks of Europe and America did not start their journeys today. We are talking about local banks who really started their journeys effectively n the 90s.

    Reply
  3. In my earlier post, I was wrong to say “…when really is the right time to buy assets at cheap valuations than when the seller is not incentivised…” I meant to say that the best time to buy an asset is when the seller is motivated to really get out of that asset and asset prices are depressed. This is an advantage I suspect that Access Bank is taking. So the Atlas Mara guys have an incentive or motivation to get out. The fact that they mispriced and overpaid for their own purchase does not necessarily follow that Access will make their mistake. Access can walk if the pricing does not make sense and bid their time.

    Reply
    1. Thanks Abel for the insights. The update well noted. Sure, we agree with you on this “So the Atlas Mara guys have an incentive or motivation to get out. The fact that they mispriced and overpaid for their own purchase does not necessarily follow that Access will make their mistake. Access can walk if the pricing does not make sense and bid their time.”

      Reply
      1. If this sales go through, Atlas Mara will be left with Union Bank. Judging with the ROI of UBN, will it satisfies Atlas Mara or will they be ready to let go of it too. If the later becomes the option, we might see the old rumour of Access – Union Acquisition becoming a reality.

        Reply

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