Standard and Poor’s (S&P), an international credit rating agency, announced that following the merger between Access Bank Plc and Diamond Bank, it has discontinued the its ‘CCC+/C’ long- and short-term issuer credit ratings and its ‘ngBB/ngB’ Nigeria national scale ratings on Diamond Bank.
The rating agency also affirmed the ‘B/B’ long- and short-term issuer credit ratings and ‘ngA/ngA-1’ Nigeria national scale ratings on Access Bank and assigned the bank a stable outlook.
S&P said the affirmation of its ‘B/B’ ratings on Access Bank was based on its view that short-term acquisition risks were likely to be offset by the bank’s track record and orderly approach to mergers and acquisitions.
According to a report by the international credit rating agency, “Access Bank has demonstrated its ability to identify and select accretive assets, and it successfully integrated Intercontinental Bank after acquiring it in 2011. We believe the Diamond Bank deal will cement Access Bank’s market leading position in the top-tier of the competitive Nigerian banking sector”.
The report also noted that “the combined entity has total assets of about 6.1 trillion naira, representing almost a 20 percent total market share. The combined entity boasts the largest franchise by customer base, loans, and customer deposits”.
It added that “we believe the deal could expand Access Bank’s customer and loans base compared with peers, underpinning stronger revenue stability during an economic downturn in Nigeria (relying on its non-interest revenues base) and earnings growth as Access Bank deploys its scalable banking platform effectively”.
The report revealed that over the medium term, the deal would help Access Bank strengthen its franchise and revenue generation capabilities.