Access Holdings plans to leave some foreign markets to follow CBN rules

Access Holdings is thinking about leaving at least one market outside Nigeria. This move is to follow a rule from the Central Bank of Nigeria (CBN). The rule says banks can only invest up to 10 percent of their shareholders' funds in foreign subsidiaries.

The banking group mentioned it would sell its stake in one business to meet this requirement. Bloomberg reported this on Monday, citing Chairman Aigboje Aig-Imoukhuede. He said, "If a subsidiary cannot meet its cost of capital and the strategic objectives for which it is set up, you should be ready to take a decision to exit." Mr Aig-Imoukhuede spoke at the African Financial Industry Summit in Luanda, Angola, last week.

He also stated, "Do we have one or two troublesome subsidiaries? I can think of one."

As of the end of September, Access Holdings had invested N446.6 billion in subsidiaries. This amount is about 19.3 percent of its equity. This is roughly double the 10 percent limit set by the Banks and Other Financial Institutions Act (BOFIA) 2020. The Act says banks can only go over this limit if they get special approval from the CBN.

The CBN has given Access Holdings 12 months to fix this issue. The possible exit is part of the bank's plan to review its international operations to meet this rule. In June, the CEO of Access Bank, Roosevelt Ogbonna, said the bank would cut down its shareholding in some foreign subsidiaries to comply with the rules.

Innocent Ike, the CEO of Access Holdings, mentioned three strategies the bank will consider. These options include bringing back surplus capital from overseas subsidiaries, selling minority stakes, and restructuring some businesses.

He also said the group has completed one capital repatriation exercise with six targeted subsidiaries. They are currently working with regulators in five countries to help return excess capital to Nigeria. Access Holdings aims to meet the regulatory requirement before the March 2027 deadline, according to Mr Ike.

"We gave ourselves up till January next year, and I think we’re completing this ahead of schedule," Mr Aig-Imoukhuede said. The chairman of Access Holdings said the group’s international portfolio is still strong despite plans to sell parts of some international subsidiaries.

He pointed out that the group will keep reviewing how its subsidiaries perform to ensure they make good returns and align with the goals for which they were set up. "You have to do dynamic portfolio management. Every year, you’re looking for ways to improve," he added.

In the past, Access Bank sold its 97 percent stake in a loss-making subsidiary in Ivory Coast to Cameroon’s Afriland First Group SA for $1 million in January 2014. This happened after the CBN limited parent-bank capital for foreign subsidiaries.