Good merger, acquisition in banks’ driven by strategic plan, not distress factor—Amangbo
The Managing Director of Zenith Bank Plc., Mr. Peter Amangbo, has opened up on factors driving workable Mergers and Acquisition (M&A) in the financial service sector of a growing economy.
In an interview, he said whereas M&A remains a normal business strategy, “It is not necessarily by virtue of a company or a bank going distress that you intervene to M&A”.
“Actually, we are not AMCON, Central Bank or NDIC that acquire banks. Even if I am talking about acquisition, I can deliberately say I see this bank as having strength in a particular area. If I go with my own strength and combine it with their own, then we can build a formidable force.
So we can decide to come together not necessarily being in distress before we can talk of acquisition.
Business Hilights recalls that there had been divergent views on the ongoing merger and acquisition between Access Bank and Diamond Bank.
Whereas a set of observers saw the entire deal as hostile acquisition due to Diamond Banks weakness in capital adequacy ratio, both banks are trying to force analysts see the development as merger instead of hostile acquisition as the trouble started when it was becoming clear that issues of capital ratio are hovering around Diamond bank in the last few months.
Explaining more on M&A without any particular reference to Access/Diamond deal, Zenith Bank chief argued that banking M&A need not be driven by distress factor, rather the fitting of one’s strategic plan in the new combination.
Continuing, Amangbo queried “Do you know how many companies that the likes of Apple and Microsoft acquire on a regular basis?
“They would have probably acquired over 100 medium and small fintechs, not necessarily because of the issue of distress; it is a deliberate business strategy.
“I want to remove the issue of distress. The issue of M & A in the banking industry in Nigeria is always regulatory induced.
“There are very few cases that you can think of that are not regulatory induced. I doubt if it is up to one percent that are not regulatory induced. So when you begin to see businesses coming together to say I think there is value here let us do it together, I think it is very positive.
“And it also shows we are maturing as an economy; businesses can come together on their own to merge. If we are matured this way, the issue of distress may not come up. Before it gets to that point, you could have offered yourself for merger.
“In a way, we are maturing in the industry and the economy is maturing. If the opportunity is there, any bank can be acquired but you must look at what you are acquiring. What is the value proposition? At the end of the day, are we going to be better together?
Zenith Bank chief argued further that “On that ground it is better but not on the perception of whether there is a challenge or not”.
