By JAMES ANYANZWA

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It will position it as a top-tier player in the country and poised to deliver a robust range of innovative banking solutions

Nigerian Access Bank Plc secured N3.3 billion ($2 million) gain on the acquisition of the African Banking Corporation Tanzania (ABCT) Ltd in a transaction that was completed on May 31 through a three-year deferred payment plan.

Disclosures from the company’s latest interim financial statements for the six months to June 30 show that the Nigerian Pan-African lender will pay N23.3 billion ($14.16 million) for the 97 per cent shareholding in the Tanzanian lender, compared to the fair value of the net assets at the time of acquisition of N26.6 billion($16.17 million), translating to a bargain purchase of N3.3 billion($2 million).

“The Group acquired 97 per cent of the share capital of African Banking Corporation (Tanzania) Ltd on May 31, 2024. The fair value of the consideration and net assets at acquisition were N23.3 billion and N26.6 billion respectively, resulting in a provisional gain (bargain purchase) of N3.3 billion,” the lender disclosed. “This is a deferred consideration as payment is not due until three years’ time.”

Read: Nigerian Access Bank completes acquisition of Tanzanian lender

A bargain purchase occurs when a firm is purchased at a lower value than its fair market value and this kind of transaction usually happens when a business is in a crisis while a deferred payment is a payment plan that allows repayment of a debt at a future date without interest accruing.

Special-purpose acquisition

Access Bank which is listed on the Nigerian Stock Exchange (NSE) first announced the deal to acquire majority equity stake in ABCT Ltd, a subsidiary of London-listed Atlas Mara Ltd (ATMA), an Africa-focused special-purpose acquisition company with stakes in different banks across the continent on July 14, 2023.

The group also acquired 100 per cent of the share capital of the African Banking Corporation Zambia Ltd indirectly through another subsidiary entity, Access Bank Zambia Ltd on January 5, 2024.

Access Bank views its entry into the Tanzanian market as a major boost to its vision of becoming the World’s Most Respected African Bank.

“This strategic move represents a notable step towards setting a railroad in Tanzania for intra-African trade within the East African region, Africa and the rest of the world,” says Roosevelt Ogbonna, the group’s Chief Executive said regulatory filings to the Nigerian Stock Exchange (NSE) dated June 10, 2024.

“It underscores our commitment to creating a robust East African banking network, driving positive change and innovation. We are excited about the opportunities this acquisition presents for our operations in Tanzania and are eager to leverage our combined strengths to deliver exceptional financial solutions and experiences to our customers.”

Following the completion of the Transaction, ABCT will be merged with the consumer, private, and banking business of Standard Chartered Bank Tanzania to be acquired by the bank to establish Access Bank Tanzania as an enlarged entity within Tanzania's banking landscape.

This combination is expected to position Access Bank Tanzania as a top-tier player that is poised to deliver a robust range of innovative banking solutions that would meet the diverse needs of our customers.

“The completion of our transaction with Access Bank Plc, not only underscores the strong confidence of Access Bank in our operations and the Tanzanian market but delivers new and exciting opportunities for our customers, employees, and stakeholders,” says ABCT managing director John Imani.

“The new entity is poised to enhance our service offerings, leveraging Access Bank’s extensive resources and expertise to deliver even greater value to our clients.

"We look forward to an exciting and prosperous future as part of the Access Bank family, driving economic growth and financial inclusion across Tanzania."

Read: Nigeria’s Access Bank acquires Ugandan lender

In August last year (2023) Access Bank Plc (Access) and Standard Chartered Bank entered into agreements for the acquisition of the British lender’s majority shareholding in its subsidiaries in Angola, Cameroon, The Gambia, Sierra Leone, and its Consumer, Private & Business Banking business in Tanzania subject to regulatory approval.

Access said the deal with the British lender —Standard Chartered Bank— presented a key step in its journey to build a strong global franchise focused on serving as a gateway for payments, investment, and trade within Africa and between Africa and the rest of the world.

In January this year (2024) Access Bank announced a deal to acquire 80.88 percent shareholding in Uganda’s Finance Trust Bank and two months later (in March) entered into a binding agreement with KCB Group Plc for the acquisition of the entire issued share capital of National Bank of Kenya Ltd (NBK) from KCB.

In 2020 the lender completed the acquisition of Kenya’s transnational bank and acquired an additional 16.22 percent shareholding in its Rwandan subsidiary valued at $9.55 million to strengthen its position in the East Africa region.

The investments increased Access Bank’s shareholding in the Rwandan Subsidiary to 91.22 percent from 75 percent while laying firm grip on the Kenyan subsidiary with a 99.98 percent shareholding.