The Nation Newspaper

Tag: Mainstreet

  • Skye Bank takes over Mainstreet

    Skye Bank takes over Mainstreet

    Banking has got another giant, with the  Asset Management Corporation of Nigeria (AMCON) at the weekend transferr ownership of Mainstreet Bank to Skye Bank Plc.

    The transfer took place after a completion meeting where AMCON divested its interest and transferred  ownership of the bridge bank to  Skye Bank, which paid 100 per cent of the acquisition value.

    The Nation last week exclusively reported the clearance of the acquisition by the Securities and Exchange Commission (SEC), the apex capital market regulator that has statutory control over mergers and acquisitions.

    At a short handover held at AMCON headquarters in Lagos, at which the directors of Mainstreet Bank and Skye Bank were present, AMCON handed over ownership and praised Skye Bank for emerging the preferred of the over 29 bidders “in the highly competitive and transparent process that took over a year to complete”.

    Skye Bank was lauded “for its tenacity and doggedness in pursuing the acquisition with all sense of seriousness and professionalism”.

    AMCON also praised the out-going Board and Executive Committee members of Mainstreet Bank for “their dedication and service to Nigeria in steering and piloting the affairs from what it used to be, to profitability”.

    Between October 3 and October 31, Skye Bank paid both the initial 20 per cent mandatory deposit and completed the 80 per cent 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.

    While addressing the executive members and management team of Mainstreet Bank at the bank’s headquarters after the handover by AMCON in Marina, Skye Bank Group Managing Director Mr. Timothy Oguntayo, assured the staff and customers of good times ahead. He solicited the co-operation of all in ensuring a seamless transition.

    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. It will also increase the bank’s market position in the industry and at the stock market.

    Analysts predict that 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 201 branches across 35 of the 36 states and the Federal Capital Territory, Abuja. It has nine cash centres 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 per cent or 54 branches of Mainstreet Bank’s network are located in the two regions. These two regions also account for 28 percent of Mainstreet Bank’s over 1.9 million customers, second only to Lagos with 37 percent.

    With smooth and seamless integration, Skye Bank will make valuable in-roads into these two regions without the need to incur huge expenditure. The acquisition will bring valuable concurrence and synergy 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 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 per cent and 18 per cent of total deposits, total loans and profit before tax. Mainstreet Bank’s savings and demand deposits accounted for 21 per cent and 43 per cent 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 Limited has a history of successfully managing agricultural loans, which accounted 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 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.

    Besides driving growth with its inorganic strategy, Skye Bank, organically, has been witnessing a notable upturn in its performance.  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. With gross earnings of N97.1 billion, the bank was able to reduce its interest expense by 15 percent year-on-year to close at N30.3 billion compared with N35.7 billion as at September 2013.

  • ‘Skye Bank could create better values from Mainstreet Bank acquisition’

    Financial and investment analysts across a broad spectrum of leading Nigerian and international investment companies have said the recent acquisition of Mainstreet Bank Limited by Skye Bank Plc holds significant positive prospects for the bank.

    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.

    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.

    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 company 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.

    The benefit, he said, will also spread to the larger Nigerian capital market in terms of trading activity and capitalisation.

    Head, Research and Investment Advisory, Sterling Capital Markets, Sewa Wusu, said the acquisition would improve the operational performance of the bank and would create better returns to shareholders in form of enhanced dividend and capital appreciation.

    According to him, the acquisition, operationally, is a game-changer for Skye Bank given the 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 assets. 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 Centres 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 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.

    With smooth and seamless integration, Skye Bank will be able to 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 in a larger Skye Bank. Skye Bank focuses 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.

     

     

  • AMCON and Mainstreet Bank sale

    AMCON and Mainstreet Bank sale

    • Friday deadline raises pertinent questions of due diligence and fairplay

    Barring any change of mind, the deadline set by the Asset Management Corporation of Nigeria (AMCON) for prospective investors in Mainstreet Bank to turn in their Expression of Interest (EOI) expires tomorrow. Convinced that one week was sufficient for any serious investor to turn in their EOIs, the corporation had set the one-week limit for the exercise.

    However, this decision appears to have been largely, badly received by investors and other stakeholder groups who consider the time given for the exercise as being too short for any meaningful evaluation and due diligence to be done on the bank.  Asides, some were of the opinion that AMCON should actually tarry to allow the Central Bank of Nigeria (CBN)-governor designate, Godwin Emefiele, settle down before commencing the sale.  They also pointed to unresolved labour issues in other transactions and the need to address them before the conclusion of the sale.

    To start with, we share in their concerns that any rush by AMCON to sell the bank would negate the lofty ideals of fairness, openness and transparency which the corporation had advertised as its guiding principle. The investors certainly have a point when they insist that the process requires enormous work on their part. Of course, in the circumstance, their demand for extension of the time to do a thorough work of evaluation would not only seem fair but reasonable. Moreover, given that the CBN governor-designate is expected to take over by June 1, we do not see anything wrong with the call to tarry.

    Be that as it may, we cannot entirely discount the fears of the corporation, particularly the risk of rendering the exercise not only open-ended but an all-comers affair. AMCON boss, Mustafa Chike-Obi may not have been altogether too cynical when he noted that an earlier exercise on Enterprise Bank, produced in all, 26 so-called investors, a number of whom he described as “spare parts dealers”, particularly as he claimed that over 30 investors are being expected this time around – a number he considers apparently unwieldy to go into the bank to do due diligence.

    With due respect to the AMCON chief, there is clearly no guarantee that the short time-frame for the investors to turn in their EOIs would produce his expected class of serious investors. There are in fact real possibilities that investors regarded as “unserious” might actually be the ones that would show up in the event of an adverse timeline.  This is certainly not what AMCON wants.

    Having said that, we do not see how a short extension would hurt the process. Indeed, we see much to be gained by a thorough and deliberate process which seeks to balance the fears of a possible laissez-faire process with the requirement for a process that is inclusive. That is the only way to assuage the fears of the concerned stakeholders that there are no underhand dealings; it is the surest way to enhance the credibility of the process.

    How much time do the investors need for their due diligence? We believe that this could be worked out between AMCON and the investors. With proper engagement and good faith on all sides, we believe a mutually-agreeable time-frame can be worked out. Our understanding is that the investors need basic information on the bank to be able to make informed bid just as it is the responsibility of AMCON to assist the investors in all the way it can. Having come this far, we cannot afford anything of a botched process.

  • Mainstreet Bank commits N10b to agric devt

    Mainstreet Bank Limited has invested over N10 billion into the Federal Government backed Growth Enhancement Scheme (GES) designed to provide affordable agricultural inputs like fertilizers and hybrid seeds to farmers. This will assist them to increase their yields per hectare and make it comparable to world standard.

    The Executive Director, Corporate and Investment Banking, Mainstreet Bank Limited, Mr Roger Woodbridge said the bank’s investment in the GES scheme has given it an opportunity to contribute towards the reduction of hunger amongst Nigerians. He said the lender offers a learning experience to other banks that are still skeptical about agricultural funding. He commended the Federal Government for coming up with the GES scheme.

    Speaking to newsmen after a stakeholders meeting held in Abuja recently, Mr Woodbridge acknowledged that the GES scheme has enabled the private sector to play an integral role in growing the nation’s food production. Citing Mainstreet’s experience in funding fertilizer distribution to agro-dealers and smallholder farmers, he stressed that the Public Private Partnership (PPP) provides effective framework for private sector engagement in overall agricultural development.

    ‘Nigerian banks must lend support to human centred development activities such as agriculture which has the ability to increase the production capacity of local farmers as well as aid to gainful employment for the youth population,” he said.

    Also commenting on the recent Millennium Development Goals (MDG) report, where The United Nations Food and Agricultural Organisation (FAO) honoured Nigeria and 37 other nations for reducing the number of people living in absolute hunger in their countries by half well ahead of the year 2015, he expressed excitement that concerted efforts in the implementation of the Federal Government’s agricultural transformation initiative would in the shortest possible time stimulate wealth creation along the agricultural value chain especially amongst the rural populace.

     

  • Mainstreet Bank and my ATM woes

    Mainstreet Bank and my ATM woes

    SIR: I attempted to withdraw the sum of 40,000 naira from Diamond Bank branch Ikorodu on November 20, 2012. Only N20,000 was released while N40000 was debited into my account Acct no 5002599647.I traveled out of the country, came back in January after which I complained verbally, and filled three dispute forms at my branch, Ojuelegba and also Ikorodu and Calabar branches. Till date, nothing has been done.

    I got the highest insult when I was told in my branch that it was confirmed I withdrew the money. I have written my branch manager and copied the managing director without any response. The so-called customer care hotline 014622706 was never picked after several attempts. This is a 21-year old account and it amazes me that the bank could be irresponsibly silent on this issue.

    It goes beyond the amount involved. I am, by his grace, not a pauper and wouldn’t lose sleep over this amount. I will advise the bank to pay the money back into my account immediately or at least, prove that I withdrew the money. I have had enough of this irresponsibility. Even with that, they have already lost a customer!

    • Olusegun Akintunde Ige

    Lagos