The bank is offering steep yields on the CPs, with the 180-day tenor carrying an implied yield of 19.45% and the 270-day tenor offering 24.75%, according to the Pricing Supplement for the Offer seen by MoneyCentral.
According to Access Bank, the proceeds from the CP issuance will be used for short-term working capital needs and lending activities. However, investors and analysts note that Tier-One banks typically do not rely on CPs for liquidity, as they have access to cheaper funding through vast customer deposits.
For context, as of Q3 2024, Access Bank reported:
- ₦40.6 trillion in total assets
- ₦11.9 trillion in loans and advances
- ₦22.3 trillion in customer deposits
Despite these figures, the decision to tap into the commercial paper market suggests a potential liquidity crunch or a deliberate move to bypass higher borrowing costs from other sources.
Unusual Move for a Tier-One Bank
In Nigeria, commercial papers are short-term debt instruments (up to 270 days) issued by corporations to raise quick capital. Traditionally, non-financial firms dominate this market, including Dangote Cement (₦281.79 billion), MTN Nigeria (₦375 billion), Flour Mills of Nigeria, Nigerian Breweries, UACN, C & I Leasing, and Mixta Real Estate.
Access Bank stands out as the only commercial bank to issue CPs over the past five years. Typically, Tier-One banks prefer to leverage massive deposit pools, access the Central Bank of Nigeria’s (CBN) discount window, or tap the interbank market for short-term liquidity.
A senior banking treasury source told MoneyCentral:
“Big banks don’t usually issue CPs unless they’re looking to avoid high borrowing costs or require a specific liquidity boost. Their funding base is generally stable and cheaper.”
On March 20, 2025, the Nigerian interbank rate stood at 30.16%, while the CBN's Standing Lending Facility (SLF) rate was 31.75% after the regulator lifted borrowing restrictions.
Despite the CP offering a slightly lower rate than the SLF, most banks would still prefer CBN intraday facilities or the interbank market over locking into a 270-day CP at 24.75%, which could become an expensive liability over time.
Merchant banks like NOVA, Coronation, FSDH, and Rand Merchant Bank have issued CPs in recent years due to their smaller balance sheets and lack of a strong deposit base. However, for a commercial bank like Access, this move raises red flags.
Another banking source commented:
“Commercial banks issuing CPs is rare and could signal weakness to depositors or regulators, who expect them to self-fund through deposits, CBN facilities, or interbank borrowing.”
Regulatory & Financial Pressures Mounting
Access Bank is also facing regulatory and financial pressures, particularly with its expansion strategy across Africa and beyond.
Credit Rating Setback
Recently, GCR Ratings (GCR) withdrew its credit ratings for Access Bank South Africa due to insufficient information provided by the bank. Despite capital injections totaling ZAR 1.4 billion (₦115 billion) since 2021, the South African subsidiary has continued to report losses and is projected to remain unprofitable in the short to medium term.
GCR’s report warned that:
- Capitalization will deteriorate unless the bank raises additional capital.
- Access Bank South Africa ranks 24th out of 30 banks, with less than 0.1% market share in assets, loans, and deposits.
Access Bank recently offered $159 million to acquire Bidvest Bank Holdings Ltd. to expand its presence in South Africa, but execution risks remain high.
Similarly, Fitch Ratings highlighted concerns that Access Bank’s rapid cross-border expansion could pressure its financial health:
“While Access Bank has successfully integrated domestic acquisitions, its numerous cross-border deals increase execution risks and could weaken financial metrics.”
Meanwhile, Augusto & Co. noted that its "Aa" credit rating for Access Bank is constrained by:
- Nigeria’s fragile economy
- Elevated operating costs compared to other Tier-One banks
- Challenging environments in key African markets
Legal & Investor Confidence Issues
Access Bank is also grappling with 1,846 ongoing legal cases, of which 1,843 were filed against the bank. According to the Offer Memorandum, total claims against the bank amount to ₦12.76 trillion.
Although its legal advisers, Wigwe & Partners and Aluko & Oyebode, believe these cases will not impact Access Bank’s ability to meet obligations, they admitted:
“We cannot and do not express any opinion on the credibility of the cases or the likelihood of success.”
Investor sentiment remains bearish, with Access Bank trading at just 0.25x its book value—the cheapest among Tier-One banks. The bank also has:
- The worst one-year return (-7.3%)
- The worst year-to-date return among Tier-One banks
A low price-to-book (P/B) ratio below 1.0 often suggests investor doubts about a bank’s financial strength, profitability, and shareholder value. If sustained, this could lead to a higher cost of capital should the bank need to issue more equity.
Bottom Line: A Bank Under Pressure?
Access Bank’s move to raise commercial paper, despite having a strong deposit base, raises concerns about liquidity, borrowing strategy, and investor confidence.
While the bank maintains that the CP issuance is meant for short-term funding needs, analysts and investors remain skeptical. Its declining stock price, ongoing legal battles, credit rating concerns, and costly expansion plans suggest that the market is not fully convinced by its growth story.
The coming months will be crucial as Access Bank navigates funding pressures, regulatory scrutiny, and investor skepticism.