…says Board chairman didn’t resign
The shares of Diamond Bank fell on Friday after the mid-tier lender denied it was talking to new investors to shore up its capital even as it chairman didn’t resign contrary to media reports.
“Diamond Bank is not in talks with any party, global or otherwise, for any capital injection,” the bank told Reuters on Friday.
“While previous communication from the bank has highlighted a need to shore up the bank’s capital adequacy ratio (CAR), the preferred option is an internal capital management programme.”
Two banking sources had told Reuters on Wednesday that Diamond Bank was in talks with new investors after the lender said Board chairman Oluseyi Bickersteth and three other directors had resigned with immediate effect.
The bank did not say why they resigned, but investors took the view that the bank, which has private equity firm Carlyle as a shareholder, would be able to raise capital more easily under new management.
However, Bickersteth told Reuters later on Friday that he was still on the board of the bank. “We had a valid board meeting on Oct. 22 which I chaired,” he said.
Bickersteth said he favoured looking at all options for recapitalisation, including a rights issue or a takeover.
Diamond Bank has 61.9 per cent free float while Carlyle owns a 17.75 per cent stake, which it bought for $147 million in 2014 when the bank was trading at 0.6 times book value as against 0.15 times now.
Nigerian businessman Pascal Dozie, who founded the bank in 1990, holds 14.2 per cent with his family.
Chief Executive Uzoma Dozie told Reuters on Friday that Diamond Bank was not in any formal talks with any party at the moment.
“The Dozie family, I suspect, will consider options when put on the table. At present there are none,” Dozie said.
Bickersteth said a possible shareholder meeting was in the works.
One investor, who owns shares in Diamond Bank, said his fund was pushing for a management change at the lender. The investor did not want to be identified.
Meanwhile, Nigerian banks face stiff competition from rapidly growing financial technology firms that offer low-priced services in the payments market in the country. But despite the competitive conditions, several of Diamond Bank’s rivals have outperformed, the investor told Reuters.
Diamond shares closed down 3.4 per cent at N1.44 on Friday, after rallying 24 per cent during the week to a four-month high on expectations the bank would raise fresh capital.
“Investors reacted negatively because the statement issued today (Friday) was disappointing. Investors expected some kind of acquisition to come through,” one analyst said.
In 2016, Diamond said it was conducting a capital management plan and would ensure it met regulatory requirements, adding that it was considering raising fresh capital and selling some assets to strengthen its capital base.
The bank said it recognised the need to expand its short term options but that there was no new concrete development.
Analysts have noted that the bank has maintained a 16 per cent capital adequacy ratio, the minimum required by the Central Bank of Nigeria (CBN), which has limited growth and profitability.
