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Standard Bank, FirstRand examine Nigerian bank bids

South Africa’s FirstRand Ltd. and Standard Bank Group Ltd. have both registered with the Central Bank of Nigeria, CBN, to investigate buying distressed lenders in the West African country.

The timetable for buying any of the 10 Nigerian institutions that failed an audit last year will be determined by the CBN, FirstRand Chief Executive Officer, Sizwe Nxasana said.

The Johannesburg-based bank said it may prefer to buy one of Nigeria’s ‘healthier’ banks.

“There are opportunities across the board and we are still looking at all the options.” Nxasana said.
FirstRand first mooted its African expansion plans last June while Standard Bank is also looking to add to its assets in Nigeria.

While the country’s banking crisis last August saw the CBN inject N620bn into 10 banks to cover bad debts, the economy’s growth potential means Nigerian institutions offer “nice opportunities,” investor Mark Mobius said last week.

“There are risks in Nigeria but I believe FirstRand is well placed to help manage those risks with a local partner,” said Jan Meintjes, portfolio manager and director at Gryphon Asset Management in Cape Town, which owns FirstRand shares. “The opportunity far outweighs the risks.”

Standard Bank climbed 0.6 per cent to 103.20 rand in Johannesburg, valuing the lender at 160.8bn rand ($21.7bn). FirstRand fell 1.4 per cent to 18.43 rand for a market value of 103.9bn rand.

“Our preference isn’t a distressed bank,” Sam Moss, spokeswoman for Johannesburg-based FirstRand said. It’s partly a due diligence exercise. We’re keen on healthier banks.”

There may be concern over the quality of the assets at distressed banks, said Henré Herselman, a derivatives trader at BoE Stockbrokers in Johannesburg.

Standard Bank, which already operates in Nigeria as Stanbic IBTC Plc after buying a Lagos-based bank in 2007, may use acquisitions to bolster expansion.

“Standard Bank sees further growth opportunities in Nigeria, both organically on the back of a well established local business, which is fully integrated into the rest of our network, as well as through select acquisitions that can facilitate faster development of our Nigerian business or add market share and scale,” Clive Tasker, CEO of the bank’s African unit, said.

“Because FirstRand does have excess capital, it is a good time for it to now be acquisitive and arguably its entry to Nigeria will be cheaper than Standard Bank’s,” said Neville Chester, banking analyst and portfolio manager at Cape Town-based Coronation Fund Managers Ltd. “The one thing FirstRand is not short of is good management.”

The CBN, last October, said it will limit domestic banks’ market share to 20 per cent and prevent the country’s biggest lenders from acquiring stakes in 10 institutions that failed an audit earlier this year.


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