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Tuesday, March 28, 2023

Access Bank Injects N11.5bn New Capital into South Africa’s Grobank

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…as losses to continue in 2021

Access Bank the Nigerian multinational commercial bank which acquired agricultural bank Grobank in March has injected new capital into the bank to the tune of N11.51 billion (R400 million), as it begins the process of turning around the distressed lender.

“New capital injection of N11.51 billion (R400 million) into Grobank was received from Access Bank Plc on 3 May 2021…and the letter of support from Access Bank Plc pledging capital and funding support in the event of any capital or liquidity shortfall,” Grobank said.

GroBank made a loss in the financial year ended 2020 of R354 million and in the financial year ended 2019 of R93 million, according to data from financial statements seen by MoneyCentral.

The Bank has forecast that it will continue to make losses in 2021, however it is expected to be profitable from 2022.

However, the Bank is solvent and has a current net asset value of R176 million.

On the 25 March 2021, the Prudential Authority of South Africa and the South African Minister of Finance approved the application of Access Bank Plc to become the controlling shareholder of Grobank.

Access Bank Plc became the controlling company effective from 3rd May 2021, owning 90.35 percent of Grobank Limited, while GroCapital Holdings held 9.64 percent, and other minority shareholders 0.01 percent.

MoneyCentral exclusively reported earlier this year that the Access Bank acquisition target Grobank had been making recurring losses since 2014, which raises questions about how long it will take Access Bank to turn around its new acquisition, and how much money it will need to invest in that venture.

Grobank made a loss of Rand 58.19 million in 2014, loss of Rand 26.56 million in 2015, loss of Rand 29.35 million in 2016, loss of Rand 25.72 million in 2017, and Rand 48.28 million of losses in 2018.

The struggling Grobank in a statement said, the support from the new shareholder, Access Bank Plc, will be available in the form of capital, liquidity and business relationships to facilitate an increase in revenues.

Access Bank however has its work cut out for it as it moves to turn-around the challenged South African lender.

The non-performing loans and advances ratio for Grobank doubled to 10.79 percent of total outstanding loans in 2020, from 5.86 percent in Full Year 2019, led by defaults in home loans, data seen by MoneyCentral shows.

Access Bank Group MD Herbert Wigwe said recently that the bank “is here to stay”, and it will change how things are done in South Africa.

It plans to target many untapped “spots” in South Africa, especially immigrants, as many don’t have South African bank accounts.

Access Bank wants to be “the natural home” to everyone living in the country the MD of Access Bank South Africa, Bennie van Rooy, said.

He added that if the bank starts by focusing on the immigrant diaspora, it will be looking at three million registered diaspora Africans.

Access is the largest bank in Nigeria and has a presence in 14 African countries. Beyond the African shores, it also has operations in China, Dubai, and London.

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