OKEY NWANKWO

CBN’s final approval was conveyed to Diamond Bank in a letter signed by Mr G. A. Oladejobi on behalf of the Director of Banking Supervision.

Also boards of Platinum Bank Plc and Habib Bank Nigeria Plc have approved merger of the banks to form PlatinumHabib.

Chairman of Platinum Bank, Professor Pat Utomi and his counterpart at Habib, Alhaji Kola Abiola speaking yesterday at a press conference in Lagos, said the emerging bank will be a formidable institution that will be at the forefront of banking in the post consolidation era.

But the CBN letter issued yesterday reads: "We refer to your letter of October 17, 2005 in respect of the above subject matter and hereby convey final approval of the Central Bank of Nigeria for the proposed takeover of Lion Bank Plc by Diamond Bank Plc.

According to the letter, Lion Bank has handed over its banking licence to the Director of Banking supervision.

Following the final approval, the two banks have fused as one business entity operating under a single trade name - Diamond Bank.

Daily Champion notes that both banks signed a memorandum of understanding (MoU) on June 14, on the basis of which they agreed to combine their operations under the Diamond Bank brand name.

The signing of the MoU in Jos was followed by a due diligence examination of the operations of Lion Bank, while the two banks adopted a common business strategy as well as a programme of business alignment for their combined entity.

On August 27, 2005, the acquisition process was boosted when the CBN gave its approval-in-principle for Diamond Bank to proceed. This was followed shortly by The Securities and Exchange Commission’s (SEC) approval-in-principle on September 9, 2005.

The Diamond Bank/Lion Bank combination has been widely adjudged to be the fastest of such arrangement since the inception of the bank consolidation drive by the monetary authorities.

Diamond Bank’s strategy for meeting the CBN equity benchmark for banks has been that of retaining its brand and brand equity post-consolidation, and to achieve this objective without eroding its underlying fundamentals as a very profitable operations.

Towards meeting this objective, the Bank had in late 2004 executed a highly successful Private Placement share offer scheme. The offer itself was 125 per cent subscribed. The outcome of the PP immediately raised the Bank’s shareholders ‘ funds from N6.7 billion to about N19 billion. A further 100 per cent consolidation of year 2005 net earning took the shareholders’ funds to about N21 billion.

Diamond Bank also approached the capital market in September to raise an additional N6.8 billion in equity through an Initial Public Offering (IPO) of 1 billion shares of 50 kobo each at N6.80 per share. At the end of the offer scheme, and with the Lion Bank acquisition, the Bank’s shareholders’ funds will be in the region of N33 billion.

On his part Prof. Utomi said the group has already applied to the Central Bank of Nigeria (CBN) for pre-merger consent while application for approval-in-principle will follow immediately.

He said both banks intend to conclude the merger in record time, ahead of the December 31 deadline for the consolidation programme.

The Platinum Bank chairman said the merger arrangement has gone beyond getting "unstuck" as considerable time has been spent out all essential issues.

On the choice of partners, he explained that the two banks came together in order to build an institution that would create values for stakeholders.

He said "our strategic intent is to build a national and diversified franchise creating superior value for our stakeholders through an unmatched superior customer service experience.

Prof. Utomi said in order to achieve and surpass this goal the emerging institution will be built on effective corporate governance framework, performance oriented corporate & culture and executive leadership that is firm and inspirational.

On his remarks, Alhaji Abiola said the merger brings Habib Bank to a new phase of growth.

According to him, the emerging institution will provide clients and customers unrivalled services adding the union will create value for shareholders.

PlatinumHabib Bank group has a combined asset base of over N116 billion, deposit base of N60 billion, shareholders fund of over N25 billion, gross earnings of over N14 billion with a network of 10 on-line, realtime branches.