Nigeria’s Access Bank has agreed to takeover mid-tier rival Diamond Bank, the lenders said on Monday, in a deal both said would create Africa’s largest bank by customers.

Nigerian banks have been trying to raise fresh capital after huge loan losses worsened by an economy that is recovering from its first recession in 25 years.

U.S. private equity firm Carlyle owns a 17.75 percent stake in Diamond Bank which it bought for $147 million in 2014 when the bank was trading at 0.6 times book value as against 0.15 times now.

“The board of Access Bank PLC today announces it has signed a memorandum of agreement with Diamond Bank PLC regarding a potential merger of the two banks that will create Nigeria and Africa’s biggest bank by customers,” Access Bank said in a statement to the Nigerian stock exchange.

As part of the deal, Diamond Bank said its shareholders would receive 3.13 naira per share, comprising of 1.00 naira per share in cash and the allotment of 2 New Access Bank ordinary shares for every 7 Diamond Bank ordinary shares.

Diamond and Access Bank both gained nearly 10 percent.

Diamond Bank said the board believed the move was “in the best interests of all stakeholders”. The bank also said its chief executive officer would step down after the merger.

Nigeria’sSecurity and Exchange Commission (SEC) late on Monday issued a statement in which it said: “It is a notice to merge, they have not merged yet. SEC is awaiting their application on the matter.”

ALSO READ: Access Bank gets nod to raise additional GH¢450 in capitalA

Credit: Reuters