Diamond Bank: Customers In Desperate Cash Withdrawals

Bank to Close Branches

The managing Director of Diamond Bank, Uzoma Dozie will be remembered for bequeathing to the new generation bank one    of the best virtual banking operations in Nigeria.

Some customers in its Awolowo, Ikoyi branch, told the magazine last week that Diamond Bank internet banking is second to none.

Indeed, this is the only good news from the bank, coming on the heels of last week’s decision by Diamond Bank’s management to shut down its UK operations.

The development has fueled speculation that all is not yet well with the bank.

The customers are right to say the internet banking may be the only legacy that the youthful managing director will be leaving behind as he exits the chief executive officer position next year.

A Weak, Unstable Bank

Apart from this, Dozie will also be leaving behind “a very weak, unstable and badly managed money lending bank” in the country, a senior staff of the bank said.

Indeed, the 2018 financial year has not been very rosy for the bank “in terms of figures and numbers,” a banking expert, Samson Osakwe told the magazine last Friday, following the approval of the Central Bank of Nigeria, CBN’s nod to the bank to dump its international license and start operating as a national bank.

The approval came barely one month after the boardroom crisis that led to the forced resignation of its former chairman, including three directors.

Seyi Bickersteth alongside other three directors had unexpectedly thrown in the towel in what sector analysts described as unprecedented in the 28 year history of the bank.

Uzoma Dozie, Diamond Bank MD: To step down.

Biskersteth Was Forced Out

The magazine was later informed by insiders in the bank, that Bickersteth was forced out of his position due to irreconcilable differences with the managing director.

Dozie is son to the bank’s former chairman, Pascal Dozie whose family owns 14.2 percent shares in the bank.

The bank, had disclosed after the CBN’s approval that it could no longer afford to operate its offshore banks and would now concentrate fully on its operation in the Nigerian.

“By focusing and optimizing our resources towards Nigeria and the priority area of retail banking, we will be better positioned for longer term growth and greater profitability,” the chief executive of the bank said.

By that singular stroke, Diamond Bank offshore branches in the UK have been shut down, Osakwe said.

Liquidity Problem

According to Osakwe, the development has further exposed the problems facing the bank “even though the management is pretending that things are under control.”

The magazine was informed that the crisis rocking the bank is very complicated. According to Gboye Peters “the liquidity problem facing the bank is very deep. What the bank is doing is to mop up floating assets to stabilize the Nigerian operations.”

He explained that “the bank will soon face a situation where it could no longer meet its obligations to customers except something is done quickly.”

“The possibility of a takeover or merger cannot be totally ruled out in the new year,” he said, adding that this is necessary to forestall negative customers’ reaction.

Customers are reacting already to the instability in the bank.

Customers to Close Accounts

At the Opebi, Ikeja branch last week, some customers told the magazine that they are quite aware of the problem, despite the obvious cover up by the management.

According to a customer who simply identified himself as Adetola, said he’s considering “doing something about his account before the end of December to escape possible tsunami in the bank.”

He explained that “he has been using his ATM card to withdraw cash “consistently since last week and also making huge cash transfers” because news from the bank is not cheery.”

Uchena Uba, a bookseller told the magazine at its Mafoluku, Oshodi branch that ”information has spread among traders in the market that the bank is having a serious problem.”

He said he has been using the bank for more than 10 years that he’s deeply worried about the situation.

The bank had two weeks ago denied suggestions in the sector of an imminent takeover by Access Bank.

Takeover Imminent

But the magazine learned from an insider in the bank that “the buyover negotiation is currently ongoing” and that ”the books are being put in order” for that purpose.

The bank has been hit seriously following last year’s explosion in the oil sector, majorly due to falling oil prices in the international market.

It’s yet to recover from the shock, analysts told the magazine.

To Close Branches

It was further learned that the bank may be forced to shut down dozens of branches across the country as the serious problem of profitability persists.

Desperate Measures To Save The Bank

Recall that Diamond Bank sold its West African operations in Benin, Togo, Cote d’ivoire and Senegal to Manzi Finances S.A, a Cote d’ivoire holding firm last year.

The management had accepted an offer by Carlyle Group, world’s second-largest manager of investment alternatives to stocks and bonds, to acquire 18 percent stake in Nigeria’s Diamond Bank through its Carlyle Sub-Saharan Africa Fund at a cost of $147m in 2014.

Despite the multi-million dollar investment by Carlyle, the situation had failed to improve, a top manager in the bank said.

For instance, the Carlyle intervention came shortly after the bank’s share tumbled by over 21 per cent, the Nigeria Stock Exchange, NSE said.

Carlyle investment has however failed to save the bank’s stock from heading for the slope, more than four years after.

The bank’s shares had declined 3.4 percent at 1.44 naira and still struggling amid expectations from industry watchers that itwill raise fresh capital.

But the Dozie-led bank has ruled out the option in the face of decline in Capital Ratio Requirement, CAR, industry sources told the magazine on Monday.

Boardroom Crisis Deepens

Other sources also informed the magazine that the boardroom crisis that led to the ouster of its former chairman, is due to disagreement between some directors and the managing director, over Dozie’s management style.

For instance, the Bicketeth group were said to favor raising fresh capital to stabilize the bank or an “outright takeover,” a source told the magazine on Tuesday.

But the Dozie-led management is said to have ruled out this option.

Recall that Bickersteth had told Reuters, a foreign wire service that with the current financial situation, the bank needed to “recapitalize” and that to wriggle out of the problem”a right issue or a takeover” cannot be totally ruled out.

With the way things are, the magazine learned that the CBN may be forced to wade in to save situation before it’s too late.

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