Access Holdings Considers Foreign Market Exit Amid CBN Rules

Access Holdings Plc, Nigeria’s largest lender by assets, is considering exiting at least one of its foreign markets. This strategic review aims to comply with new Central Bank of Nigeria (CBN) regulations limiting banks’ equity investments in overseas subsidiaries. Chairman Aigboje Aig-Imoukhuede disclosed this last week at the African Financial Industry Summit in Luanda, Angola. The banking group has identified at least one underperforming subsidiary for potential disposal as part of these efforts.

The CBN directive restricts banks from holding more than 10% of their total shareholders’ funds in foreign subsidiaries. Access Holdings is pursuing three strategies to meet this threshold. Chief Executive Officer Innocent Ike outlined these as recalling surplus capital, divesting minority shareholdings, and restructuring some businesses. He confirmed one capital repatriation exercise is complete, involving six targeted subsidiaries, and is engaging regulators in five countries to return excess capital.

Access Bank, the group’s primary banking subsidiary, held investments in foreign subsidiaries amounting to 19.4% of its shareholders’ funds in May. This figure is significantly above the CBN’s mandated 10% limit. The regulator gave the lender 12 months to address this excess exposure, setting a deadline for March next year. This potential divestment is a direct response to regulatory pressure.

This move is crucial for Access Holdings to maintain regulatory compliance and ensure capital efficiency. By divesting from underperforming units, the group can reallocate capital to more profitable ventures or strengthen its domestic operations. For investors, it signals a proactive approach to managing its international portfolio and adhering to local banking regulations, which could enhance long-term stability and shareholder value. Aig-Imoukhuede emphasized disposing of subsidiaries that fail to meet their cost of capital and strategic objectives.

Access Holdings is working to bring its foreign investment ratio within statutory limits ahead of the March deadline, with Chairman Aig-Imoukhuede indicating the exercise could be completed earlier than anticipated. The group has a precedent for such actions, having sold its loss-making Ivory Coast subsidiary in 2014 following a similar CBN restriction on parent-bank capital support for foreign units. Despite potential divestments, Aig-Imoukhuede maintained confidence in the group’s international operations, stating they offer growth opportunities.