The Merger Of Access Bank Zambia Limited And Bank ABC (T/A Atlas Mara) Limited: Consolidation In The Zambian Banking Sector And Its Immediate Medium- And Long-Term Effects
Introduction
Access Holdings Plc’s subsidiary Access Bank Zambia Limited has received final regulatory approval from the Central Bank of Zambia to acquire and merge African Banking Corporation Zambia Limited (Atlas Mara Zambia) into its operations. Sunday Ekwochi, the Company Secretary, announced this on Friday. It said the Central Bank of Nigeria and Common Market for Eastern and Southern Africa Competition Commission had given their “no objection” to the Transaction in 2022. The statement said Access Zambia would integrate Atlas Mara Zambia into its activities, creating one of Zambia’s top five banks. Dr. Herbert Wigwe, Group Chief Executive of Access Holdings, said, “The transaction builds on our earlier acquisition and merger of Cavmont Bank Plc into Access Bank Zambia and underscores our resolve to strengthen our presence in Zambia, a key African market that fits into our strategic focus on geographic earnings growth and diversification. “Access Zambia’s world-class wholesale and transaction banking capabilities and Atlas Mara Zambia’s market-leading retail and public sector capabilities will create significant synergies to form a market-leading universal banking platform that will greatly impact the Zambia market.” The statement anticipates a Q3 2023 closing.
Consolidation in the Zambian banking sector is anticipated to have both positive and negative short-, medium-, and long-term effects:
Short-Term
In the short term, consolidation may result in employment losses, especially in the banks that are merged or acquired. However, it can also result in increased efficiencies, cost reductions, and economies of scale, which can be advantageous for both institutions and their customers. Additionally, the consolidation may increase competition among the remaining institutions, which could result in enhanced consumer services and products.
Medium-Term
Consolidation may result in the formation of larger, more financially stable institutions that can better withstand economic disruptions and fluctuations in the medium term. The capacity of the consolidated banks to finance large-scale projects and initiatives, which can benefit the economy as a whole, may also be enhanced. However, consolidation may also lead to decreased competition and increased market power among the remaining institutions, which may result in increased costs and decreased innovation.
Long-Term
Consolidation may result in a more concentrated banking industry, with fewer companies controlling a larger market share. This could potentially restrict competition and diminish customer options. However, the formation of larger, more financially stable institutions may also contribute to the long-term expansion and stability of the banking sector and the economy as a whole.
Conclusion
The impact of consolidation on the Zambian banking industry will depend on a variety of factors, including the specific institutions involved, the character of the consolidation, and the regulatory framework currently in place to supervise and regulate the industry. Although there are potential benefits and drawbacks to consolidation, policymakers and industry stakeholders must carefully consider the implications and ensure that any consolidation is in the best interest of consumers and the economy as a whole.
Reagan Blankfein Gates
Managing Partner | Banking & Finance
Reagan Blankfein Gates Legal Practitioners*
