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Tag: Mainstreet Bank

  • Shareholders approve Skye Bank’s absorption of Mainstreet Bank

    Shareholders approve Skye Bank’s absorption of Mainstreet Bank

    Shareholders of Skye Bank Plc have given the final nod to the acquisition and absorption of Mainstreet Bank Limited, paving the way for the emergence of the enlarged Skye Bank Plc.

    At the court-ordered extra ordinary general meeting held immediately after the bank’s 9th annual general meeting yesterday in Lagos, shareholders considered and approved Skye Bank’ proposed scheme of external restructuring which deals with the acquisition and consolidation of the operations of Mainstreet Bank with Skye Bank Plc.

    The Asset Management Corporation of Nigeria (AMCON) had on December 19 transferred full ownership of Mainstreet Bank Limited to Skye Bank Plc. The transfer of full ownership took place after a completion meeting where AMCON divested its interest and transferred full ownership of the bridge bank to Skye Bank. Skye Bank had successfully paid 100 per cent of the acquisition value and received regulatory clearance as the new owner.

    Chairman, Skye Bank Plc, Mr. Tunde Ayeni, yesterday confirmed that the Securities and Exchange Commission (SEC), had given its clearance to the scheme.

    He explained that after the clearance of the scheme by SEC, an application was filed at the Federal High Court which directed that the meeting of the shareholders of the banks be convened and the scheme be presented for their consideration and approval.

    The Nation had reported that the full integration and switchover of the operations of Mainstreet Bank Limited to Skye Bank, including the adoption of the Skye Bank’s brand and flag in all Mainstreet Bank’s offices, would be completed this month.

    Highlighting the benefits of the acquisitions, group managing director, Skye Bank Plc, Mr. Timothy Oguntayo, said the business combination would create a platform where significant synergies could be obtained for the benefits of the shareholders, , employees, customers and the economy as a whole.

    He added that the combination would provide opportunity to reposition the enlarged Skye Bank as a tier 1 bank within the Nigerian financial services space based on the expected benefits arising from economies of scale and scope.

    “A business combination of this nature will potentially lead to revenue enhancements and cost savings for the enlarged Skye Bank with a wider customer base,” Oguntayo said.

  • Skye Bank to complete Mainstreet Bank integration by June

    Skye Bank to complete Mainstreet Bank integration by June

    Skye Bank Plc will absorb Mainstreet Bank Limited in June as it concludes the final round of integration of the operations of Mainstreet Bank.

    Group Managing Director, Skye Bank Plc, Mr. Timothy Oguntayo, who confirmed this at the weekend, said the integration and merger with the attendant brand name change, workforce and operations convergence were expected to be completed in June.

    According to him, a stronger Skye Bank should emerge in June, following the conclusion of the consolidation of the operations of Mainstreet Bank with that of the parent company.

    “We are in the process of merging the two institutions; that should happen in June. Then, you will have a stronger Skye Bank,” Oguntayo said.

    The Nation had reported exclusively in December 2014 that Skye Bank will merge the operations of Mainstreet Bank Limited and absorbed the bank under its brand name.

    The Asset Management Corporation of Nigeria (AMCON) had on December 19 transferred full ownership of Mainstreet Bank to Skye Bank Plc, giving the latter the control to begin the post-acquisition integration for the acquired bank. The transfer of full ownership took place after a completion meeting where AMCON divested its interest and transferred full ownership of the bridge bank to Skye Bank. Skye Bank had successfully paid 100 per cent of the acquisition value and received regulatory clearance as the new owner.

    A reliable source had told The Nation that the board of Skye Bank had decided to pursue full integration and merger of the operations of the acquired bank with that of Skye Bank, rather than operating the acquired bank as a stand-alone commercial bank and a subsidiary.

    In deciding on the integration and merger, the source said the directors and top management executives of Skye Bank considered the low-profile brand status of Mainstreet Bank; a name that was adopted after the AMCON acquired the then Afribank Nigeria Plc. The board also sought to optimise efficiency by reducing operating costs, which would be higher in the event of running the acquired bank as a subsidiary.

    Full integration and merger has been a favourite option for mergers and acquisitions in the banking industry. Access Bank had adopted the same option in the acquisition of Intercontinental Bank while Ecobank Transnational Incorporated had adopted similar approach in the acquisition of Oceanic Bank International.

    The board of Skye Bank had then appointed an interim management for Mainstreet Bank, with a dual mandate to run the bank within the immediate period and lead the full integration and merger.

    The interim management board comprised Mrs. Amaka Onwughalu, the deputy managing director of Skye Bank and Mr. Dotun Adeniyi, an executive director and chief risk officer of Skye Bank.

    Between October 3 and October 31, Skye Bank paid both the initial 20 percent mandatory deposit and completed the 80 percent balance well ahead of the November 3 deadline for the 100 per cent acquisition of Mainstreet Bank which has been described by several analysts and financial commentators as a ground breaking acquisition in Nigeria’s financial sector.

    Analysts have been unanimous in that the acquisition, operationally, is a game-changer for Skye Bank, given possible synergies and the impact on the balance sheet and profitability of the bank, while it would also increase the bank’s market position in the banking industry and at the stock market.

    Analysts have said the potential impact will be big on Skye Bank’s reach and asset size. Mainstreet Bank has nine subsidiaries and a large distribution network comprising of 201 branches across 35 out of 36 states in Nigeria and the Federal Capital Territory, Abuja. It equally has nine cash centers and 205 Automated Teller Machines (ATMs).

    Skye Bank, with dominant operations in the Southwest, is also banking on Mainstreet Bank to deepen its penetration of the South-East and South-South regions where it is less represented. Some 26 percent or 54 branches of Mainstreet Bank’s network are located in the two regions. These two regions also accounted for 28 percent of Mainstreet Bank’s over 1.9 million customers, second only to Lagos with 37 per cent.

    With smooth integration, Skye Bank will make valuable in-roads into these two regions without the need to incur huge expenditure, while the acquisition would bring valuable concurrence and synergies from the mutual focus areas of commercial and retail banking of the two entities. Skye Bank focuses on retail and commercial banking which is also the main focus areas of Mainstreet Bank.

    The last audited report and accounts of Mainstreet Bank for the year ended December 31, 2013 showed that retail and commercial banking contributed 78 percent, 36 percent, and 18 percent of total deposits, total loans and profit before tax.

    Also, Mainstreet Bank’s savings and demand deposits accounted for 21 percent and 43 percent of the deposit mix, which also demonstrated its focus on these two segments. A second generation leader, Mainstreet Bank has a large pool of loyal institutional and corporate customers, which in spite of its status as an AMCON-owned bank, ensures that the bank retained almost its two million customers after the takeover.

    Also, Mainstreet Bank has managed agricultural loans, which accounted for 12.6 percent and 16.9 percent of its loan portfolio in 2012 and 2013, second only to ‘general’ sector. Analysts have said Mainstreet Bank’s expertise in managing agric loans made its non-performing loan ratio very negligible at 0.01 per cent, where Skye Bank saw a significant opportunity to improve its expertise in this area, and therefore raise its market share in the agriculture sector. This will position Skye Bank very strategically to partner with and participate in the Federal Government’s short and medium term planned strategic investments and budgetary allocation to the agriculture sector.

    Oguntayo has said the synergies between the two institutions had given Skye Bank the competitive edge, which it would leverage to deliver quality customer service and high returns to shareholders.

    He said the acquisition has provided the bank the opportunity to optimise cost, assuring that the bank would leverage its superior information technology to block leakage as well as pursuing aggressive expense control.

    According to him, as the bank assumes the status of a mega bank following the acquisition, it will place strong emphasis and focus on retail and commercial banking as a way of bringing about a healthy deposit mix to cut its cost of funding.

    He highlighted that the new business strategy will also allow the bank to reduce the volume of public sector deposit and term deposit at its disposal for enhanced profitability and business sustainability.

    He outlined that the bank would continue to upgrade its information technology continually, while also promoting the usage of point of sales terminals and automatic teller machines to serve its teeming customers.

     

     

     

     

     

     

     

     

     

     

  • SEC clears Skye Bank’s Mainstreet Bank acquisition

    Securities and Exchange Commission (SEC) has no objection against the acquisition of Mainstreet Bank Limited by Skye Bank Plc, clearing the way for Skye Bank to complete the acquisition process and begin integration of the acquired bank.

    After regulatory review, SEC, the apex capital market regulator which also has the sole jurisdictional authority on mergers and acquisitions, has given”No Objection” consent to the acquisition.

    The “No Objection” consent implies that SEC had reviewed the entire acquisition transaction and found that it duly complied with extant laws, rules and regulations and best practices. In a reversed case, any objection by SEC must be rectified before the closure of the transaction. In the event of irreconcilable objection, SEC is statutorily empowered to stop the transaction.

    Ahead of the November 4 deadline, Skye Bank had on October 31 paid the 80 per cent balance for the full acquisition of the entire issued shares of Mainstreet Bank to the Asset Management Corporation of Nigeria (AMCON), thus making Skye Bank the new owner of Mainstreet Bank. It had earlier on October 9 paid the mandatory deposit of 20 per cent for the acquisition of Mainstreet Bank. The payment of the 80 per cent balance to AMCON wholly fulfilled the terms of the Share Sale and Purchase Agreement earlier signed by both AMCON and Skye Bank and now put the latter in ownership of Mainstreet Bank.

    Regulatory filing obtained by The Nation showed that SEC had issued a “No Objection” letter to the Skye Bank’s Mainstreet Bank acquisition. Regulatory sources and major parties to the transaction confirmed the clearance.

    Sequel to the clearance, Greenwich Trust Limited, a broker-dealer member of the Nigerian Stock Exchange (NSE), which is acting as professional adviser to Skye Bank, has notified the Exchange that the bank will now move on to complete the post-acquisition process.

    The clearance came on the heels of favourable analysts’ review of the transaction. Financial and investment analysts across a broad spectrum of leading Nigerian and international investment companies said the acquisition holds significant positive prospects.

    The analysts said the acquisition has placed Skye Bank as a bank to watch given the immense potential and synergies that the bank could extract from the acquisition to further entrench its commercial banking operations and extended its branch network.

    According to analysts, the acquisition could significantly impact on the performance of the bank and further reconfigure the Nigerian banking with expectations that Skye Bank, which has already been designated as one of Nigeria’s eight systemically important banks, will move on to the topmost rank of the banking industry.  Skye Bank is expected to move the ladder up in all measurable indices – size, spread, strength, resistance, profitability and returns.

    Analysts were unanimous that with detailed and seamless execution of post-acquisition integration, there would be considerable values from the acquisition in terms of Skye Bank’s reach and assets as the bank leapfrogs on the back of this to become one of the biggest and largest banks in the country in terms of branch network.

    Kato Mukuru, Partner and Head of Equity Research at Exotix Partners LLP, said the deal was a major positive step for Skye Bank.

    According to him, while it may be too early to fully review the financial impact of the transaction, there is no doubt that the acquisition represented a major leap for Skye Bank.

    “While we do not have enough detail on the transaction to comment on the financial impact, but I can safely say that this deal is nothing short of transformational for Skye Bank and if executed well, it could put them in a position to enter the elite group of tier 1 banks,” said Mukuru.

    Exotix is a major global finance and investment companies with considerable imprints in world and Africa’s commercial centres. It coordinates its global operations through five major offices in London, New York, Lagos, Dubai and Nairobi.

    “Scale is critical to banking in Nigeria and we all know that this acquisition fills a major regional gap – the North, in Skye Bank’s current distribution,” said Mukuru.

    Head of research and intelligence at BGL Plc, Mr. Femi Ademola, said the acquisition could enhance the performance of Skye Bank noting that there are substantial values and synergies that could come in terms of spread and reach and deposit assets.

    “I think the acquisition is very positive for Skye Bank Plc,” Ademola said.

    According to him, “the acquisition will improve the Skye Bank’s capital adequacy and liquidity ratios since most of the Mainstreet Bank’s assets are invested in very liquid assets. Consequently, it is expected that the acquisition will also help to boost the Skye Bank’s profitability, going forward”.

    Group head, research, Lead Capital Plc, Sadiq Waziri, said the most significant gains to Skye Bank would come in terms of the expanded branch network and the resultant increase in customers, particularly savings and current account depositors, which are the cheapest form of deposits.

    “Mainstreet Bank was formally Afribank, which was established in 1959; the bank is endowed with a lot physical assets – properties in prime areas, which Skye Bank would benefit from,” Waziri said.

    Head, Trade Execution, Securities Africa Financial Limited, Akinkunmi Popoola, pointed out that the bigger branch network would enable Skye Bank to mobilize more low cost deposits and enhance its lending capacity, which will translate to improvement in loan-deposit ratio as the bank can rely more on its own deposits to grant loans to its customers.

    “This is helpful at a time like this when liquidity of banks generally is threatened by the raising of Cash Reserve Requirement (CRR) on public funds by the Central Bank of Nigeria (CBN),” Popoola said.

    “Investors and shareholders should expect to see value creation in form of capital appreciation and improved dividend because ultimately the bigger Skye Bank should be able to post decent profit going forward. The banking sector will also benefit as the development is expected to emphasize the banking sector as the preferred sector by prospective investors,” Popoola said

  • How acquisition of Mainstreet Bank will boost Skye Bank’s status

    How acquisition of Mainstreet Bank will boost Skye Bank’s status

    Ibrahim Apekhade Yusuf in this report takes a look at the economic fundamentals of Skye Bank Plc following its recent acquisition of the Mainstreet Bank, one of the nationalised banks owned by the Asset Management Corporation of Nigeria (AMCON).

    For good measure a lot is bound to change in the banking sector as economic and financial pundits see the current wave of mergers and acquisition in the country as the second round of consolidation especially as banks like Skye, which acquired Mainstreet Bank, has invariably attained the status of mega banks with solid capital base.

    Road to Mainstreet acquisition

    Between September 11, 2014 and now, the Asset Management Corporation of Nigeria (AMCON) announced names of the preferred bidders for two of its three banks penciled down for sale.

    On September 11, AMCON announced Heritage Bank Limited as the preferred bidder for Enterprise Bank, three weeks after, it named Skye Bank Plc as the preferred bidder for Mainstreet Bank Limited.

    Skye Bank, a leading tier 2 Bank in Nigeria, was among the eight banks recently designated as ‘Systemically Important Banks’, which reflects its industry leadership, strong market share, diverse location spread, and strong brand equity. AMCON, in a statement signed by its Head, Corporate Communications Strategy and Research, Mr. Kayode Lambo, announced Cedar One Investment Partners Limited as the first reserve bidder and Fidelity Bank Plc as the second reserve bidder for the acquisition of the entire issued and fully paid up ordinary shares of Mainstreet Bank Limited.

    The corporation explained that its board of directors had approved the transaction. It, however, pointed out that the completion of the transaction was subject to the fulfillment of the conditions precedent as stated in the Share Sale and Purchase Agreement (SPA) to be executed with Skye Bank as well as the receipt of all required regulatory approvals from the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC).

    However, within four days of the announcement of Skye Bank as the preferred bidder by AMCON, the bank effected payment of the mandatory 20 per cent before the expiry of the one-week given.  This was on October 9, the same day it signed the Share Sale and Purchase Agreement. And in a rare display of buoyancy, leadership and commitment to see the deal is properly closed, the bank again, on October 31 paid the 80 per cent balance to complete the takeover of Mainstreet with one week to the deadline given by AMCON.

    Implication for banking landscape

    In the view of analysts, the acquisition of Mainstreet Bank has launched Skye into the league of the top three banks in Nigeria and with very promising future. It is believed that the bank will leverage on the widespread of Mainstreet branch network to consolidate its calculated advancement thereby giving it a superior place in the league of Nigeria’s top three banks.

    According to Skye Bank, the acquisition will avail it of many benefits, including cost leadership, business optimisation, and greater ability to offer business convenience to its teeming retail and commercial customers, with a combined branch network of over 450, across all the states of the Federation.

    Mainstreet Bank, then AfriBank used to be the fourth biggest bank, after First Bank, Union Bank and UBA.

    AMCON had announced Skye Bank as the preferred bidder for the acquisition of all its interest in Mainstreet Bank, representing the entire capital of the bridge bank. Skye Bank emerged the preferred bidder after a rigorous bidding exercise that spanned five months, with over 20 bidders contending.

    Reacting to the development, Skye Bank said the acquisition of Mainstreet Bank was part of its strategic plan for growth. Skye Bank emerged from the very successful merger and integration of five banks in 2006, following the first phase of the banking industry consolidation. The Bank intends to leverage its wealth of experience from the successful integration of five banks to drive efficiency, increase market share and ultimately ramp up stakeholder value from the acquisition of Mainstreet Bank.

    The bank said the acquisition would help deepen its penetration of the South East and South South regions where it is currently less represented, explaining that out of Mainstreet Bank’s 201 branches and nine subsidiaries, 26 per cent or 54 branches are located in the two regions.

    “These two regions also accounted for 28 per cent of Mainstreet Bank’s over 1.9 million customers, second only to Lagos with 37 per cent. This clearly shows that the integration of Mainstreet Bank will enable us make valuable in-roads into these two regions without the need to incur huge expenditure had we remained a single entity as Skye Bank”, the top lender explained.

    Besides, Skye Bank explained that the acquisition would bring valuable synergies from the mutual focus areas of commercial and retail banking of the two entities in a larger Skye Bank. The bank noted that its focus is on retail and commercial banking, which is also the main focus areas of Mainstreet Bank Limited.

    A flip through Mainstreet Bank Limited’s 2013 audited results, put retail and commercial banking contribution at 78 per cent, 36 percent, and 18 per cent of total deposits, total loans and profit before tax. Also, Mainstreet’s savings and demand deposits accounted for 21 per cent and 43 per cent of deposit mix, which also demonstrated its focus on these two segments.

    Mainstreet Bank, according to insiders to the deal, has a large pool of very loyal institutional and corporate customers, in spite of its status as an AMCON-owned bank, ascribing customer loyalty to the existence of Mainstreet’s current 1.9 million customers, a little less than the pre-AMCON takeover figures.

    Skye Bank’s fundamentals

    Skye Bank Plc has announced its Third Quarter result with moderate growth in some performance indices. It recorded a Profit before tax of N12.3billion during the period which represents a quarter on quarter growth of 33 per cent%.

    With gross earnings of N97.1billion, the bank was able to reduce its interest expense by 15 per cent Year on year to close at N30.3billion compared to N35.7billion as at September 2013. This is in line with its operational strategy of increasing the volume of low cost funds in its deposit portfolio.

    The Bank closed with a year-to-date net loans and advances balance of N576billion showing a 6% increase Year on year. Similarly, customer deposits grew to N801.7billion as against N726.8billion of the previous year while asset size remained strong at N1.1trillion with a 3 per cent year-on-year growth.

    The bank said barring any unforeseen circumstances, the growth pattern would be improved on in the remaining period of the financial year.

    “Our loan impairment charge increased by 62 per cent Year on year to N7.5billion, being a deliberate policy of aggressive provisioning early in the year to enable a fairly sustained position and avoid high concentration in the last quarter of the year. Non-interest income improved by 15 per cent YoY to N17.6billion compared to N15.2billion of the corresponding period in 2013.”

    To analysts, combining Mainstreet Bank numerous branches with Skye Bank’ the new status may sure give First Bank, Zenith and GT Bank a run for their money.

    Skye Bank parades Sterling management team. As if they knew they would go this big, there has been continuous restructuring in the last few months, including a new Managing Director/Chief Executive, Mr. Timothy Oguntayo, with futuristic outlook working with people of equal strength.

  • Skye Bank: Riding the wave of Mainstreet Bank’s acquisition

    Skye Bank: Riding the wave of Mainstreet Bank’s acquisition

    As the news of the full payment for the acquisition of Mainstreet Bank Limited by Skye Bank Plc hit the stock market, share price of Skye Bank raced through the down market to record the highest gain on Monday. Capital Market Editor, Taofik Salako, reports that the acquisition may be a game-changer for Skye Bank

    Skye Bank was the best-performing overall stock at the stock market on Monday. Against the worsening downtrend at the Nigerian Stock Exchange (NSE), Skye Bank’s share price recorded the maximum allowable daily percentage change of 10 per cent. Besides being the highest gain for the day, the significance of the bank’s upswing was further impressed by its contrarian nature. The market opened on Monday with renewed bearishness. With nearly four losers to every gainer, average decline at the NSE was 0.55 per cent, a downturn that accentuated the loss of 3.93 per cent recorded last week. But Skye Bank rode on the momentum of the news of the completion of the payment for its acquisition of the entire issued shares of Mainstreet Bank, an inspiring news that market pundits believed would continue to leapfrog the performance of the bank in the period ahead.

    Skye Bank at the weekend paid the 80 per cent balance for the full acquisition of the entire issued shares of Mainstreet Bank to the Asset Management Corporation of Nigeria (AMCON), thus making Skye Bank the new owner of Mainstreet Bank. In a confirmation of its often-stated robust balance sheet, Skye Bank was said to have paid some N100 billion to AMCON on Friday October 31 as balance for the acquisition, which was valued at some N120 billion. The deadline for the payment of the balance was November 3, 2014.

    Skye Bank had on October 9, 2014 paid the mandatory deposit of 20 per cent for the acquisition of Mainstreet Bank, a deal that was valued at between N120 billion and N126 billion. The differential in the value was due to the variation in exchange rate base used by the different sources for the dollar-based value of the deal. The payment of the 80 per cent balance to AMCON wholly fulfilled the terms of the Share Sale and Purchase Agreement earlier signed by both AMCON and Skye Bank and now put the latter in ownership and control of Mainstreet Bank.

    The stock market’s response, the gauge to measure investors and stakeholders’ perception of a transaction, was driven by pundits’ assessments of the transaction process, its potential impact on the performance of Skye Bank and the banking industry generally. The Mainstreet Bank’s transaction was a highly competitive sale process, a transaction that was the cynosure of all eyes given the historic importance of Mainstreet Bank, a bridge bank that metamorphosed from the rubbles of Afribank Nigeria Plc, a quoted bank that was once Nigeria’s fourth largest bank. The rigorous and competitive bidding process involved 25 Nigerian and foreign bidders and was coordinated for AMCON by Barclays Africa Group Limited and Afrinvest West Africa Limited as Financial Advisers and Banwo & Ighodalo as Legal Advisers. In the end, Skye Bank Plc, Cedar One Investment Partners Limited and Fidelity Bank Plc emerged as preferred bidder, first and second reserve bidders respectively. It was a transaction adjudged by many as transparent and credible.

    But even with the payment of the 20 per cent mandatory deposit, totaling some N20 billion, many pundits were still on the sideline playing the waiting game. The proviso, as stated in the purchase agreement, was that in the event that Skye Bank failed to make the balance payment, the deal will automatically move to Cedar One and in the event of the failure of the first reserve bidder, the deal will move to Fidelity Bank, another quoted bank that wanted to leverage growth with acquisition. Amidst skepticism by some, Skye Bank promised to complete the transaction within the timeline. It kept faith with the weekend payment, sending all the bystanders on the rush for the shares of the bank.

    Besides, the acquisition ranked as one of the biggest acquisitions in Nigeria, a deal that confirmed the robustness of the balance sheet of Skye Bank and the growing depth of the mergers and acquisition market in the country.

    But the most important consideration, to most stakeholders, is the potential impact on the operations and performance of Skye Bank. The acquisition leapfrogged Skye Bank as one of the biggest and largest banks in the country in terms of branch network. Mainstreet Bank has nine subsidiaries and a large distribution network comprised of 201 branches across 35 out of 36 states in Nigeria and the Federal Capital Territory, Abuja. It equally has nine cash centres and 200 Automated Teller Machines (ATMs).

    Skye Bank, with dominant operations in the Southwest, is banking on Mainstreet Bank to deepen its penetration of the South East and South South regions where it is currently less represented. Some 26 per cent or 54 branches of Mainstreet Bank’s network are located in the two regions. These two regions also accounted for 28 per cent of Mainstreet Bank’s over 1.9 million customers, second only to Lagos with 37 per cent.

    “This clearly shows that the integration of Mainstreet Bank will enable us make valuable in-roads into these two regions without the need to incur huge expenditure had we remained a single entity as Skye Bank”, Skye Bank had stated in its preview of the transaction. Besides, Skye Bank expected that the acquisition would bring valuable synergies from the mutual focus areas of commercial and retail banking of the two entities in a larger Skye Bank. Skye Bank focus is on retail and commercial banking, also the main focus areas of Mainstreet Bank.

    Latest audited report and accounts of Mainstreet Bank for the year ended December 31, 2013 showed that retail and commercial banking contributed 78 per cent, 36 percent, and 18 per cent of total deposits, total loans and profit before tax respectively. Also, Mainstreet Bank’s savings and demand deposits accounted for 21 per cent and 43 per cent of deposit mix, which also demonstrated its focus on these two segments.

    Mainstreet Bank, according to insiders to the deal, has a large pool of very loyal institutional and corporate customers, in spite of its status as an AMCON-owned bank, ascribing customer loyalty to the existence of Mainstreet Bank’s current 1.9 million customers, a little less than the pre-AMCON takeover figures.

    Also, Mainstreet Bank Limited has a history of successfully managing agricultural loans, with agric loans accounting for 12.6 per cent and 16.9 per cent of its loan portfolio in 2012 and 2013, second only to ‘general’ sector. Analysts have said Mainstreet Bank’s expertise in managing agric loans made its non-performing loan ratio to be very negligible at 0.01 per cent, where Skye Bank saw a significant opportunity to improve its expertise in this area, and therefore raise its market share in the agriculture sector.

    The acquisition came as Skye Bank was entering a major recovery phase. The bank recorded a pre-tax profit of N12.3 billion on a top-line of N97.13 billion in the third quarter. Key extracts of the interim report and accounts of the bank for the nine-month period ended September 30, 2014 showed modest growths in some performance indices. The pre-tax profit of N12.3 billion represented a quarter-on-quarter growth of 33 per cent but a year-on-year decline of 15.3 per cent.

    With gross earnings of N97.1billion, the bank was able to reduce its interest expense by 15 per cent year-on-year to close at N30.3 billion compared to N35.7 billion as at September 2013. The bank stated that this was in line with its operational strategy of increasing the volume of low cost funds in its deposit portfolio. The bank closed with a year-to-date net loans and advances balance of N576 billion, showing a six per cent increase year-on-year. Similarly, customer deposits grew to N801.7 billion as against N726.8 billion of the previous year while asset size remained strong at N1.1trillion, an increase of three per cent year-on-year growth.

    In a statement, the bank noted that it would improve on the growth pattern in the remaining period of the financial year.

    “Our loan impairment charge increased by 62 per cent year on year to N7.5 billion, being a deliberate policy of aggressive provisioning early in the year to enable a fairly sustained position and avoid high concentration in the last quarter of the year. Non-interest income improved by 15 per cent year-on-year to N17.6 billion compared to N15.2 billion of the corresponding period in 2013,” the bank stated.

    According to the bank, the deliberate focus on cost reduction organisation-wide has paid off with a year-on-year reduction of one per cent in operating expenses which closed at N46.9 billion as against N47.2billion in September 2013.

    Skye Bank, a leading tier 2 bank that was recently designated among the eight ‘systemically important banks’, looks to leveraging on the acquisition to enhance its market position and returns to investors.

    According to the bank, the acquisition of Mainstreet Bank was part of its strategic plan for growth as it intends to leverage on its wealth of experience from earlier successful mergers and acquisitions to drive efficiency, increase market share and ultimately ramp up stakeholder value from the acquisition of Mainstreet Bank. Skye Bank emerged from the merger and integration of five banks in 2006, following the first phase of the banking industry consolidation.

    The management of Skye Bank outlined that the acquisition will avail it of many benefits, including cost leadership, business optimisation, and greater ability to offer business convenience to its teeming retail and commercial customers, with a combined branch network of over 450, across all the states of the Federation.

    After the bank distributed N3.96 billion as dividends for the 2013 business year earlier this year, chairman, Skye Bank Plc, Mr. Olatunde Ayeni, had assured shareholders that the bank would continue to add value and make shareholders’ investments in the bank worthwhile.

    According to him, in 2014, all efforts would continue toward implementing the bank’s plans in the medium term and well into the future. The quest to provide the most efficient customer service, as espoused in the service charter, remains unchanged.

    Managing director, Skye Bank Plc, Mr. Timothy Oguntayo, said the bank’s growth in the current year will continue with the implementation of its strategy while increasing its customer base and market share.

    As Skye Bank progresses with the integration process, stakeholders, particularly investors, would be looking for the value creation from the deal.

     

     

  • Skye Bank pays N100b to complete acquisition of Mainstreet Bank

    Skye Bank pays N100b to complete acquisition of Mainstreet Bank

    Skye Bank Plc at the weekend paid the 80 per cent balance for Mainstreet Bank’s shares, beating today’s deadline.

    Assets Management Corporation of Nigeria (AMCON) and investment banking industry sources confirmed the payment and the completion of the acquisition.

    Sources said Skye Bank paid N100 billion to AMCON on Friday as balance for the acquisition, which was valued at N120 billion.

    Skye Bank, on October 9, paid the mandatory deposit of 20 per cent for the acquisition,  a deal that was valued at between N120 billion and N126 billion. The differential in the value was due to the variation in the exchange rate base used by the various sources for the dollar-based value of the deal.

    The payment of the 80 per cent balance has fulfilled the terms of the Share Sale and Purchase Agreement signed by AMCON and Skye Bank.

    With the payment, Skye Bank Plc has completed one of the biggest acquisitions in Nigeria, a deal which also leapfrogged Skye Bank as one of the biggest and largest banks in terms of branch network.

    Mainstreet Bank has nine subsidiaries and a large distribution network comprising 201 branches across 35  states and the Federal Capital Territory, Abuja. It has nine cash centres and 200 Automated Teller Machines (ATMs).

    The management of Skye Bank had said acquisition was one of the bank’s strategic plans for growth, having itself been a product of one of the complex mergers and acquisitions. Skye Bank emerged from the merger and integration of five banks in 2006, following the first phase of the banking consolidation.

    The bank said it intends to leverage its wealth of experience from the successful integration of five banks to drive efficiency, increase market share and, ultimately, ramp up stakeholder value from the acquisition of Mainstreet Bank.

    The management of Skye Bank has also assured the customers of Mainstreet Bank of excellent service and superior value in the enlarged Skye Bank.

    The acquisition will avail the bank of many benefits, including cost leadership, business optimisation, and greater ability to offer business convenience to its teeming retail and commercial customers, with a combined branch network of over 450, across all the states.

    Skye Bank, a leading tier 2 Bank, was among the eight banks recently designated as “Systemically Important Banks”, which reflects its industry leadership, strong market share, diverse location spread, and strong brand equity.

  • Skye Bank gets nod to acquire Mainstreet Bank

    Skye Bank gets nod to acquire Mainstreet Bank

    The Asset Management Corporation of Nigeria (AMCON) yesterday announced Skye Bank Plc as preferred bidder for the acquisition of entire issued and fully paid up ordinary shares of Mainstreet Bank Limited.

    The AMCON Head, Corporate Communications Strategy & Research, Kayode Lambo who disclosed this in a statement, said that Cedar One Investment Partners Limited emerged as the first reserve bidder while Fidelity Bank Plc was named the second reserve bidder.

    The announcement, he said, followed the receipt of approval of the Board of Directors of AMCON.

    However, Lambo said the completion of the transaction is subject to the fulfillment of the conditions precedent as stated in the Share Sale and Purchase Agreement (SPA) to be executed with Skye Bank Plc, as well as the receipt of all required regulatory approvals from the Central Bank of Nigeria and the Securities and Exchange Commission.

    He explained that in the event that Skye Bank is unable to complete the transaction in line with the payment terms and other provisions of the SPA, the SPA entered into with Skye Bank would be terminated and Cedar would become the preferred bidder.

    Likewise, should Cedar fail to complete the transaction in line with the payment terms and other provisions of the SPA, Fidelity Bank would become the preferred bidder.

    According to the AMCON Spokesman, the Mainstreet Bank sale process started with interest shown by 25 parties cutting across local and international investors.

    The emergence of Skye Bank, Cedar and Fidelity Bank as preferred, first and second  reserve bidders, respectively, he said, resulted from a rigorous and competitive bidding process, coordinated for AMCON by Barclays Africa Group Limited and Afrinvest West Africa Limited (Financial Advisers) and Banwo & Ighodalo (Legal Advisers).

    Mainstreet Bank Limited commenced operation in August, 2011, as a full-service commercial bank with a national banking license. The bank is one of the bridged banks wholly owned by AMCON.

    Mainstreet Bank has nine subsidiaries and a distribution network comprised of 201 branches across 35 out of 36 states in Nigeria and the Federal Capital Territory, Abuja. It equally has nine cash centres and 200 Automated Teller Machines (ATMs).

    Other bridged banks owned by the corporation are Keystone Bank Limited and Enterprise Bank Limited. Mainstreet Bank was created from the ashes of the defunct Afribank Plc, while Keystone Bank and Enterprise Bank were created from the defunct Bank PHB Plc and Spring Bank Plc respectively.

    The AMCON had acquired the three lenders in August 2011, after the intervention by the Nigeria Deposit Insurance Corporation (NDIC) and the CBN.

  • Mainstreet Bank bags payment standard certificate

    Mainstreet Bank bags payment standard certificate

    Mainstreet Bank Limited has been awarded Payment Card Industry Data Security Standard certification (PCIDSS). The PCI DSS is a set of requirements designed to ensure companies that process, store or transmit credit/debit card information maintain a secure environment to manage the fast evolving Payment Card Industry (PCI) security standards.

    The PCI DSS is administered and managed by the PCI Security Standards Council, an independent body that was created by the major payment card brands (Visa, MasterCard, American Express, Discover and JCB).

    Mainstreet Bank has by this recognition earned the level 1 PCI certification which is the highest rank available from the major credit card providers (Visa, MasterCard, American Express, Discover and JCB). level 1 PCI certification is only given to third-party providers who meet the Council’s stringent and audited – credit/debit card transaction security protocols to protect customers’ personal transaction data.

    Level 1 requires an external audit for approval, which is more rigorous than lower level compliance. The process further attests to the security of the bank’s network, applications, hardware and business processes.

    The audit was performed by the Qualified Security Assessor from Phillips Consulting, the first indigenous QSA in Nigeria.

    Speaking on the certification, Faith Tuedor-Matthews, Group Managing Director/Chief Executive, Mainstreet Bank noted that ‘’attaining the highest level in PCIDSS is a significant milestone for the bank being a key regulatory requirement for major electronic payment providers.  PCIDSS will further boost our customers’ confidence in the safety and protection of their electronic data and e- payment services’’.

  • Investors warn against ‘hasty’ sale of Mainstreet Bank

    Investors warn against ‘hasty’ sale of Mainstreet Bank

    Some stakeholders are criticising the steps taken by the Assets Management Corporation of Nigeria (AMCON) to sell Mainstreet Bank Limited, one of the bridged banks under its ownership.

    The steps are hasty, according to some of those interested in the process, as well as stakeholders in the defunct Afribank from where Mainstreet Bank took its root.

    The opposition is specifically against the one-week notice given by AMCON to those who are interested in bidding for the bank to express their interest. The notice is seen to be grossly inadequate for any meaningful due diligence to be done on the bank.

    In advertorials in the media last week, AMCON gave a week’s notice to interested parties in the acquisition of the bank to submit their Expression Of Interest (EOI) not later than May 16.

    To the parties, who asked not to be named so as not to jeopardise their interest, the “rush” by AMCON to push Mainstreet Bank through the divestment process without recognising the enormous work that needs to be done to ensure fairness and transparency in the eventual bid process, put a question mark on AMCON’s intention.

    The potential buyers said while they were in agreement with AMCON on the need to move ownership of the bridged banks from the domain of public ownership and government control to the private sector, the process should be well “streamlined”, well publicised and allowed enough time to be examined by all interested parties, and should never be an issue that should be,as it were, rushed, as though there is more to it than meets the eye”.

    “It is a welcome development that these banks are eventually finding their way into the private sector domain where they should be in the first place, but we insist that the process should be meticulous and not rushed, as no purpose will be served if the divestment is not transparent, or seen to be so,” they said, adding that  one week is grossly inadequate for a thorough job to be done and for every participant to be acquainted with the requirement to meet the rigorous process in the evaluation “except they want us to go home with the impression that this is a predetermined exercise.”

    The groups who are insisting that every interested party in the acquisition of Mainstreet Bank  should be given equal opportunity,  cautioned that AMCON, having midwifed the banking transformation process successfully thus far, should not rush into taking  decisions or actions that would appear in the eyes of stakeholders to be pursuing  “a hidden agenda, surreptitiously”.

    While  maintaining that the bridged banks, namely, Mainstreet Bank Limited, Enterprise Bank Limited and Keystone Bank Limited are national assets, to which every  Nigerian has a claim, they insist that  all the processes leading to their sale, or privatisation at any material time must be done in such a manner that no one is seen to be excluded, either by way of withholding information, or restricting access to the process by not allowing sufficient time for qualified people to participate therein.

    The groups and stakeholders, said it would amount to disservice and criminal acquiescence for AMCON to ignore the concerns of Nigerians by going ahead with the process of selling Mainstreet Bank Limited or any of the other two when they are eventually brought to the market without incorporating the interest of other potential buyers (even if a single buyer)  by ignoring the call for elongation of the time allotted to submit EOI and proceed with the divestment as contained in the AMCON’s  advertisement.

    They drew AMCON’s attention to the mood of the nation, regarding the kidnapping of “our daughters” by Boko Haram, stressing that no feeling of any one Nigerian should be further dampened by actions of those entrusted, not only to protect, but defend their interests.

    Taking cognisance of the transition in the Central Bank of Nigeria (CBN), the groups said much confidence would be derived if AMCON were to tarry a while and give the CBN Governor-designate, Godwin Emefiele, and his team the benefit of introspection, rather than rush the process as though any harm will be done if the divestment is not accomplished today and foist upon the new CBN Governor a fait accompli.

    They recalled the lingering and unresolved labour issues that have trailed the acquisition of some of the sold or acquired banks, stating that none of the bridged banks being prepared for privatisation at this time should be made to suffer the same fate.

    They said  labour matters are intractable and should be properly addressed to avoid any backlash.

    In its advertisement calling for Expression Of Interest (EOI), AMCON said interested buyers should provide information in respect of the vehicle or entity they intend to use in the acquisition, among others, with evidence of registration with the Corporate Affairs Commission, ownership of the acquiring entity, identifying all shareholders with five per cent , or more stake, and strategic rationale for the acquisition of Mainstreet Bank.

    In addition, interested firms are expected to provide relevant financial services industry where they have acquired cognate experience and demonstrable evidence of ability to manage a bank of the stature of Mainstreet, as well as evidence of financial capacity.

    In the case of a consortium, AMCON required that the parties must provide evidence of alliance or partnership, clearly indicating the leader of the group that is authorised to submit the EOI, adding that full names of contact persons, e-mail addresses as well as any relevant information that demonstrates credibility and eligibility for the transaction are required.

  • NSITF is Mainstreet Bank’s agent

    Mainstreet Bank has been appointed an agent for the Nigerian Social Insurance Trust Fund (NSITF) Employee Compensation Acts (ECA) for collecting its benefits.

    This is coming on the heels of the Federal Government’s determination to halt the disturbing trend of non-compensation of employees affected by workplace accidents.

    The NSITF is to receive remittances from employers at any of the bank’s branch.

    Anogwi Anyanwu, Executive Director, Operations and IT , said: “Mainstreet Bank has built a tradition of service excellence and the NSITF mandate, as well as various others, are strong testimonials of our renewed resolve to consistently offer our stakeholders the best deal.”

    He added: “The bank recently deployed one of the latest and most robust core banking application, Finacle 10, in improving our products and services, and especially to delight stakeholders with innovative solutions to their business needs. I can assure employers and the public that Mainstreet Bank is ready to support NSITF achieve its mandate in Employee Compensation Acts collections.”

    NSITF, the successor to the defunct National Provident Fund, is the government’s agency vested with providing social security, social protection for the disadvantaged.

    In the past two years the bank has had an impressive track record in the collections business.