By Ebere Chukwuma
It is no longer news that Diamond Bank, one of the nation’s fastest growing second generation Banks had been acquired by a well managed Access Bank in a deal approved by the Godwin Emefiele led Central Bank of Nigeria, CBN.
Perhaps, what is news, are the circumstances that led to the financial crisis of the Bank barely four years after Alex Oti, a former Group Managing Director of the
The Value News
The Value News
Recall that the Bank recorded a loss of 9.1billion Naira in 2016, which had a telling effect on its Operations. It was a big shock to Uzoma Dozie, the Bank Managing Director, who promised that the situation would not repeat in 2017 and beyond. Instead of the financial situation of getting better , it was said to have gotten worse as big time Customers could not withdraw as much as they want to invest in their businesses as the Bank started rationing the money that could be withdrawn at a go by a Company or importer, forcing the aggrieved Customers to cry out about the financial insolvency of the Bank.
The Bank , according to sources, was said to have made some international financial transactions to raise funds to plough back into its local banking operations and strengthen its International Banking operations. The transaction was started in May in 2013 , as the Bank was said to have sold $200 million in a five-year unsubordinated unsecured Eurobonds to pay for the Coupon of 8.75 percent.
Insiders told The Value News that the yield at inception was 9 percent of the issue price of 9.0. The Bank , a source said had planned to place the Eurobond in late June 2013 and even undertook and investor road show but the issuance was said to have been postponed by the then management led by Segun Aagbaje due to the reverse market environment and time.
The Bank management may have created the impression in the mind of both local and foreign investors that it is the largest Bank in Nigeria with net assets of over N1.5 trillion as at 2013. Within the same period , Access Bank, which had taken over the Bank operations had an estimated N1.83 trillion .
The question on the lips of most people was: what went wrong that a Bank which had witnessed steady growth for some years that it started witnessing poor delivery services to its Customers across the country that they allowed their Complaints to escalate and filter out to the public , forcing the intervention of the CBN, to save the Bank situation from getting worse.
As a prelude to saving the Bank from International embarrassment from oversea partners, the Bank was said to have requested the apex Bank to withdraw its International bankings Operation License to enable it concentrate its operation in the country only. The apex Bank did not hesitate in doing so . Dozie, the Bank’s Managing Director said the move was ” part of the Bank’s operational strategy to focus on Nigeria’s significant opportunities”.
According to him, the change in the operational license of the Bank would expand its product services to its Nigerian Customers. Given the approval of the CBN to allow it operate within the confines of Nigeria only as a national Bank, the Bank’s management were said to have taken a decision to dispose its West African subsidiary in 2017 and Diamond Bank , UK, which were ratified by the Board and are currently at its final stages of disposal. The decision was said to have been taken when the financial problem of the bank became noticeable to Customers.
Many believe that it was a wise decision by the Dozie led Management to have requested the CBN to withdraw its international Banking Operation License to concentrate on the local scene in order to retain its operational name: Diamond Bank.
There is no gain saying the fact that if the Bank had been sold as a complete sick Bank like Sterling Bank which was currently managed by the apex Bank to protect the Customers savings, as its business name was changed to Polaris to avoid any further link with past activities of the Bank.
The CBN could have taken over the management of the Bank with a change in its operational business name if it was found to be insolvent that it could not be revived with the take of its management by another Bank.
Many consider the request by the Bank to operate as a National Bank, when its problem became manifest in 2018 as a clever move by the Bank management and the Board of Directors to still remain relevant in the nation’s Banking sector.