Skye Bank is the preferred bidder for Mainstreet Bank, after rigorous bidding involving 20 others, in a process that spanned five months.
Skye Bank had emerged from the very successful merger and integration of five banks in 2006, following the first phase of consolidation in the banking industry.
And with recent acquisition of Mainstreet, the bank seems set for another round of consolidation likely to catapult it to join the big players in Tier -1 league, which boasts, among others, GT Bank, Zenith Bank, First Bank, Access Bank, Ecobank, and UBA.
In demonstration of unusual capacity, within four days of the announcement of Skye Bank as the preferred bidder by the Assets Management Corporation of Nigeria (AMCON), the Tier-2 bank paid the mandatory 20 per cent deposit of the bid price on October 9, ahead of deadline.
On October 31, it paid the 80 per cent balance to complete the takeover of Mainstreet.
This came on the heels of the designation of Skye Bank (and seven others) as ‘Systemically Important Banks’, which reflects leadership, strong market share, spread, and strong brand equity.
The acquisition of Mainstreet was part of Skye Bank’s strategic plan for growth after Access Bank and First City Merchant Bank (FCMB) leveraged on similar acquisition strategy to move to the next level.
Skye Bank intends to dip into its wealth of experience from the successful integration of five banks to drive efficiency, increase market share and ultimately ramp up stakeholder value from the acquisition of Mainstreet.
Skye Bank said the acquisition will provide many benefits, including cost leadership, business optimisation, and greater ability to offer business convenience to retail and commercial customers, with a combined branch network of over 450 nationwide.
The bank said the acquisition would help deepen penetration of the South East and South South where it is less represented, explaining that out of Mainstreet Bank’s 201 branches and nine subsidiaries, 26 per cent or 54 branches are located in the two zones.
“These two regions also accounted for 28 per cent of Mainstreet Bank’s over 1.9 million customers, second only to Lagos with 37 per cent. This clearly shows that the integration of Mainstreet Bank will enable us make valuable in-roads into these two regions without the need to incur huge expenditure had we remained a single entity as Skye Bank,” it explained.
Besides, the acquisition would bring valuable synergies from the mutual focus areas of commercial and retail banking of the two entities in a larger Skye Bank. The bank explained that its focus is on retail and commercial banking, which is also the main focus of Mainstreet.
The 2013 audit results of Mainstreet Bank put retail and commercial banking contribution at 78 per cent, 36 per cent, and 18 per cent of total deposits, total loans and profit before tax.
Its savings and demand deposits accounted for 21 per cent and 43 per cent of deposit mix, which also demonstrated its focus on these two segments.
Mainstreet Bank, according to those with knowledge of the deal, has a large pool of loyal institutional and corporate customers, in spite of its status as an AMCON-owned bank.
It has 1.9 million customers, a little less than the pre-AMCON takeover figures.
Mainstreet Bank has a history of successfully managing agricultural loans, which account for 12.6 per cent and 16.9 per cent of its loan portfolio in 2012 and 2013, second only to ‘general’ sector.
Skye Bank said Mainstreet Bank’s expertise in agriculture loans made its non-performing loan ratio to be very negligible at 0.01 per cent.
