World Report

An acquisition and the launch of an initial public offering are parts of Diamond Bank’s bid for greater market share

Pascal Dozie
Chairman of Diamond Bank

‘If you want to play a major role, you cannot just grow organically’

INTERVIEW

ne of Nigeria’s most successful banks, Diamond Bank is currently involved in a drive to rank among the country’s top three within five years.

According to Chairman Pascal Dozie (INTERVIEW), the bank is poised for major development of its infrastructure and its business. Plans have been made for a massive branch expansion programme and deployment of state-of-the-art technology.

“We are now in what may be said to be the second phase of Diamond Bank, or the new Diamond Bank,” says Mr Dozie. “By this time next year, we should boast a minimum of 200 branches.”

In August, the bank launched a bid to raise N6.8 billion (£29 million) in the capital market with a one million shares initial public offering (IPO). “Before we can do what we really want to do in terms of strengthening our process for the future challenges in the industry and the larger economy, we need a lot of capital,” explains Mr Dozie, a former President of the Nigerian Stock Exchange.

“If you really want to play a major role in the financial sector, you cannot just grow organically. And to meet the resources you require, you must take advantage of the market.” The move follows the bank’s recent signing of a memorandum of understanding (MoU) to acquire Nigeria’s Lion Bank, a deal that is expected to raise Diamond bank’s shareholders’ funds to well over N25 billion (£106 million). Absorbtion of Lion Bank’s 22 networked branches will bring Diamond Bank's nationwide branch network to 75 and create a post-acquisition balance sheet size of about N140 billion (£590 million).

After a successful private placement process last year, the bank officially listed on the floor of the NSE at the end of May. In June, it inked a seven-year on-lending loan agreement with the International Finance Corporation (IFC), the private sector arm of the World Bank Group. The $30 million (£16.8 million) loan, the second tranche from the IFC, raises the corporation’s total on-lending investment commitment in Diamond Bank to $50 million (£28 million). Established in 1991, Diamond Bank offers a full range of products and services in retail, commercial, corporate and investment banking, including advisory, investment, debt, equity, lending and transactional services. The bank posted a pre-tax profit of N3.52 billion (£14.9 million) for the financial year ended April 30, 2005 – a notable 203 percent leap over the N1.6 billion (£6.8 million) of the previous year. Total assets rose by about 80 per cent, from N73 billion (£309 million) to N131 billion (£554 million), while shareholders’ funds increased to about N21 billion (£89 million) from N6.7 billion (£28 million).

Mr Dozie attributes the bank’s success to the high standards it sets itself. “At Diamond Bank, we have striven to live up to the global best practice standard. From inception, we set out to bring about a radical turnaround in the delivery of banking services in the country. This we achieved with the use of technology as a delivery vehicle for quality service to our customers.”