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Diamond Bank Plans Acquisition

Category: Capital Market

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Diamond Bank Plans Acquisition

By Emele Onu, with agency report, 07.23.2010 

Diamond Bank plans to acquire or merge with another local bank between 2011 and 2012 to increase its size and retail banking focus.

According to Reuters news, the bank announced its decision for the inorganic expansion yesterday.Diamond Bank, which has established a number of offices offshore to meet the needs of its growing customers in strategic and target locations, said it will also explore a pan-African expansion plan between 2012 and 2014 in Togo, Senegal and Ivory Coast, Reuters reported without disclosing the source of its information within the bank.

The bank improved on its financial position in the half year, with Profit Before Tax and Exceptional Items, moving from a negative of N4.35billion from the corresponding period of 2009 to N6.09billion in the period ended June 30, 2010. The balance sheet, according to a statement by the bank, grew by 6 per cent, while liquidity ratio at 44 per cent, representing 19 per cent is above the minimum regulatory ratio of 25 per cent.

Also yesterday, the Debt Management Office (DMO) said it sold N105 billion of 20-year, 5-year and 3-year sovereign bonds at its seventh debt auction of the year.The debt office sold N35 billion each in the 20-year, 5-year and 3-year bonds at the auction.The 20-year paper was a new issue, while the two others were a re-opening of previous issues. The marginal rate on the 3-year bonds rose to 7.48 per cent from 6.4 per cent last month, the 5-year paper climbed to 8.85 per cent from 7.61 per cent and the 20-year bonds went up to 10 per cent from 8.69 per cent.

"However, the original coupon rates of 5.50 per cent and 7 per cent for the 3-year and 5-year respectively will be maintained, while the coupon rate for the 20-year is set at 10.00 per cent," the DMO said. It added that total subscription stood at N211.62 billion compared to N229.33 billion in June, but it  stuck to its initial offer of N105 billion.The DMO said the three - year bonds were 2.1 times oversubscribed, while demand outstripped supply on the five-year securities 1.8 times. The 20-year bonds were 2.1 times oversubscribed.

An analyst at Lagos-based Source Capital, Kweku Brown, said, “It is partially risk-free buying bonds, so banks are looking for such risk-free avenues.”He said the financial crisis banks faced last year made it imperative for them to become cautious with their money, adding that so long as liquidity is high, the sale of bonds will continue to rise.On the foreign exchange market, the naira rose to N150.05 to the dollar on the inter-bank market yesterday from N150.30 last Wednesday. Traders said it was the result of speculation that the Nigerian National Petroleum Corporation (NNPC) planned to sell forex to some banks.

It was gathered that many banks sold part of their dollar holdings, thereby permitting appreciation of the naira.At the parallel market traders exchanged N153 to a dollar, the same rate the previous day.


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