LAGOS (Reuters) – 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’s Security 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.”

The takeover follows weeks of speculation about Diamond Bank in the wake of the unexpected resignations of its chairman and three other directors in October.

Previous bank mergers in Nigeria have been imposed by the regulator. It was not immediately clear how this deal was agreed.

Diamond bank has been managing its capital since 2016 after huge loan losses worsened by a weak economy forced it to sell its foreign subsidiaries.

Reporting by Alexis Akwagyiram in Lagos, Chijioke Ohuocha and Felix Onuah in Abuja