The merger talks between Sterling Bank Plc and South Africa’s FirstRand, the country’s second_largest banking group, has ended after the duo could not agree on “terms for the deal.” FirstRand said in a statement yesterday it had terminated talks to acquire stake in Sterling Bank. “The parties have been unable to agree mutually acceptable terms,” the South African bank said.

Banks in South Africa, according to Reuters, are keen to expand in Nigeria, although the process so far has had plenty of hurdles.

In 2009, the Central Bank of Nigeria (CBN) injected N620 billion into nine banks deemed by auditors to have become so weakly capitalised that they posed a threat to the entire country’s banking system. Sterling Bank was one of the lenders that passed the 2009 special audit.

FirstRand, which has said it was looking to invest “meaningful amounts of capital” in Nigeria, said it still believed the country would be a key market for its Africa expansion strategy.

At the close of business weekend, shares of FirstRand were down 1.6 per cent, while shares of Sterling Bank were little changed. Sterling Bank had announced a post-tax profit of N5billion for the year ended December 31, 2010. This was against the previous year’s N7.2 billion loss.

The bank, according to the results, which was recently approved by the Nigerian Stock Exchange (NSE), sustained its profitability achieved in the third quarter driven by improved margins and control in operating costs. “At 21%, the bank’s Return on Average Equity is in the first rank percentile among all banks,” the bank said in a statement.

Speaking on the bank’s results, Group Managing Director, Yemi Adeola, said: “I am glad to report our full year performance, which was in line with our expectations and consistent with broad sector performance and wider economic trends.

A stronger balance sheet position arising from the clean up in 2009, reduced funding costs, and supportive government policies, in particular, the takeoff of the Asset Management Company of Nigeria (AMCON) served to re-ignite confidence in the banking sector.

“We were able to grow our loans by 25% and reduce non-performing loans by 44% through a combination of loan recovery and sale of impaired assets to AMCON.