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Diamond Bank Set to Acquire European Bank

Diamond Bank Plc has said  that it is in finalising arrangements to acquire an European bank with a view to harnessing  direct investment and trade flows from Europe into Nigeria.
Reuters quoted Group Managing Director/Chief Executive Officer, Diamond Bank, Mr. Alex Otti, Tuesday, to have disclosed this during an investor conference call. But he did not disclose the name of the European bank.
He was delighted that  Diamond had received an approval in principle from the Central Bank of Nigeria (CBN) for the acquisition, saying that the bank did  not need to raise additional capital to complete the deal.
“We are not looking at buying a high-street bank. It’s going to be a specialised bank that will complement our services,” he said.
“We have a lot of business flow in that direction (Europe) and we use third parties to do those. We strongly believe that if we are successful it will add value to the bank,” Otti added.
According to the Diamond Bank boss, the bank expects to make an 18 per cent return on equity in 2012 and a pre-tax profit of up to N30 billion, compared with a loss of N16.26 billion last year.
Otti said Diamond had raised $170 million in debt this year, and was on track to boosting its total debt issued in 2012 to $500 million, including issuing a planned debut Eurobond at the end of the year, to boost capital adequacy to 17 per cent.
Around $70 million of the capital already raised had come from the World Bank’s private sector arm, the International Finance Corporation, he said.
The mid-tier lender last week posted a pre-tax profit in the first nine months of the year to N23.2 billion ($148 million), pushing its shares up 20 per cent in two days, compared with a N6.9 billion loss in the same period last year. Its share price has gained 125 per cent so far this year.
“We have had to move (our operating profit) target to N55-N60 billion by year-end. We believe we should be ending the year anywhere between N25 to N30 billion pre-tax profit,” Otti said.
Diamond Bank is aggressively seeking to grow its operations to be able to tap into infrastructure and consumer growth in Nigeria. It plans to build extra 130 branches in within  a period of two years, to add to its existing 220, he said.
Meanwhile, Bloomberg also quoted Yinusa to have revealed that the financial institution planned to raise $300 million (N47.205 billion) to expand credit to customers.
Yinusa said: “Our target is for the loan to be raised by the end of this year, which will bring to $500 million what we have borrowed in the year. The purpose remains to expand our loan book and fund infrastructure.”
While the bank has no immediate plans for mergers or acquisitions, it intends to go to the capital market if it needs to raise funds after 2013 when “the market would have stabilised” in order to ensure “steady growth,” he said.
The commercial bank revised its loan-growth target for this year to 40 per cent from 20 per cent, “a modest projection from our third quarter performance,” he said.
“We want to grow our loan book aggressively to a level before we will consider slowing down,” he said.

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