Access Bank completes acquisition of Intercontinental Bank, putting to rest several issues thrown up by the banking sector reform
For many Intercontinental Bank workers who lost their jobs last week and those who are still awaiting their sack letters, the ill wind did not come as a surprise. Soon after the moves by the promoters of Access Bank to take over Intercontinental became public knowledge, it dawned on most workers of Intercontinental Bank that the end was near. Although the management of Access Bank had projected that the takeover process would last for about one year, the changes came much faster than expected. In addition to sacking about 1,500 workers of Intercontinental Bank, the management of Access Bank closed down some branches of Intercontinental and told its depositors to transact their businesses through the nearest branches of Access Bank.
The promoters of Access Bank did not get Intercontinental Bank on a platter of gold. The takeover was characterised by opposition and controversy. For instance, at the peak of opposition mounted by some shareholders’ groups that felt that Access Bank offer of a N53 billion-rescue package for Intercontinental was a curious one, the bank offered them 10 per cent equity in the emerging entity. Not a few shareholders of the troubled bank accepted the offer, while a few others are still contesting what they consider a hostile acquisition in courts.
Aggrieved shareholders of Intercontinental Bank could not come to terms with the pronouncement of Lamido Sanusi, governor, Central Bank of Nigeria, CBN, to the effect that the shareholders’ fund of the troubled bank was eroded by largely unsecured loans. The takeover plan got an early endorsement by the apex bank, which had earlier sacked five bank chief executives including Erastus Akingbola of Intercontinental.
Disengaged workers of the bank were yet another group Access Bank had to contend with. Up till last week, negotiations were still ongoing on the terms of their disengagement. Soon after they got letters terminating their appointments, the workers mobilised to challenge the step taken by the new owners of the bank. They insisted among other things, that the letters of termination served them be converted to resignation. They also demanded payment of gratuity in addition to entitlements based on the redundancy clause in their letters. The controversy generated by those demands was a subject of series of negotiations among all the parties involved.
Olusoji Salako, president, Association of Senior Staff of Banks, Insurance and other Financial Institutions, ASSBIFI, said the bank was willing to make concession even though the workers have been made to understand that the position of labour law is that they will get either redundancy benefits or gratuity depending on whichever is higher. The bank gave its position as follows: “We have taken care to ensure all aspects of the rationalisation process are fair, objective, transparent and generous. The terms for employees restructuring were reached in consultation with relevant labour bodies. All departing staff will receive prompt payment of their entitlements along with other benefits. Access Bank is also funding an outplacement service to assist staff who will be seeking employment either within the financial services sector or other sectors of the economy”.
With the emergence of Intercontinental and Access banks as one entity, the promoters say the new bank has become a financial powerhouse with diversified offerings. The combination is also said to have repositioned the Nigerian banking sector on a vantage position to compete among Africa's top 10 banks. Some of the branches of Intercontinental that were closed down as the combination was unfolding are either being renovated for rebranding while some are being offered for sale in the property market. With the combination, the bank now has a customer base of 5.7 million and 309 branches. It also has an asset base of about N2.01 trillion; capital adequacy ratio of 18.55 per cent; and liquidity ratio of 76 per cent.
Even with the job losses, which some of the disengaged workers said did not take them unaware, Aigboje Aig-Imokhuede, managing director and chief executive officer, Access Bank in a statement, described the conclusion of the transaction as a significant step forward for the Nigerian banking sector. Said he: “It has preserved thousands of Nigerian jobs, protected the savings of millions of Nigerian citizens and laid the foundation for the creation of a truly great, African bank. It brings together the proven prudential management of Access Bank and the extensive geographical footprint of Intercontinental Bank, with one of the largest networks of branches and ATMs.”
The bank also said the 5.7 million customers of the combined bank will benefit from a product range which blends the very best of both Access and Intercontinental banks’ products. Customers will also benefit from an expanded network of 309 branches along with a network of 1,600 ATMs spread across the country. To ensure that the customers enjoy efficient banking services, Access Bank says it is committing significant human and financial resources to customer and other stakeholder engagement through its contact centre, short message services, SMS, and online banking to ensure seamless transaction and impressive experience at each of the centres.
The management of Access Bank said the takeover of Intercontinental Bank is a rescue mission and that its legacy of poorly conceived investments, cost inefficiency and sub-optimal returns were inherited by Access Bank. The current job losses have brought the number of Intercontinental Bank staff who lost their jobs to about 6,000 in the last three years. In 2008 for instance, 2,000 members of staff suffered job losses, in 2009 about 1,298 staff were affected and in 2010, another 1,235 staff lost their employment. To ensure the long-term sustainability and growth of the merged entity, it is important that the bank's cost structures are brought in line with Nigerian and global best practice. Consequently some rationalisation of resources and staff was necessary.
Additional reports by Abiola Odutola, Chris Innah and Bunmi Oyerinde