Nigeria’s  banking crisis edged closer to a resolution yesterday, when the First City Monument Bank, FCMB, said it would seek shareholders’ approval to acquire Finbank.

FCMB is amongst five financially healthy lenders seeking approval for mergers with rescued peers, and is the third to announce a shareholder vote on a finalised deal. All of those deals have been approved by the Central Bank of Nigeria, CBN,, which gave nine rescued lenders until the end of September to recapitalise.

FCMB said in a notice to shareholders that the meeting will enable a vote on whether to allow the bank to either issue its shares or pay cash to the shareholders of Finbank as consideration for the transaction.

FCMB, which signed merger agreements with Finbank in July, did not disclose any financial details for the deal.

The CBN bailed out nine lenders in 2009 by injecting $4 billion to keep them afloat after reckless lending and lax management left them close to collapse.

The bail-out has created opportunities for a consolidation in the banking industry and for healthy peers like FCMB to scale up their capacity, analysts have said.

Access Bank , which is acquiring rescued Intercontinental Bank, has also announced a shareholders’ meeting. Another peer Oceanic and Eco Transnational Incorporated , the parent firm to Ecobank have revealed their plans to merge. FCMB has 133 branches with a market value of N104 billion  ($679 million), while Finbank has 180 branches and is worth N8.4 billion.

Chief Executive, Ladi Balogun told investors that FCMB would not need to raise capital to finance the acquisition of Finbank and that he expected to obtain both regulatory and shareholders’ approval within a 40 day period. FCMB in November obtained $70 million of funding from the private sector arm of the World Bank, the International Finance Corporation, to help finance the potential acquisition of a distressed rival.

It said the funding consisted of a $50 million long-term senior loan and a $20 million convertible loan. FCMB said it will also seek shareholders’ vote to ratify the loan. Three other rescued lenders were nationalised last month and the remaining one scaled down to become a regional bank.

Nigerian naira at 11-week low on high dollar demand

The Nigerian naira hit an 11-week low against the U.S dollar on the interbank market on Wednesday, following strong demand from banks buying the greenback for their foreign exchange change outlets. The local currency closed at 156.15 to the dollar, its weakest since June 25, compared with 155.75 to the dollar at the close of trading on yesterday.

Traders said strong demand for dollars from lenders to re-sell to their exchange bureau outlets coupled with the depreciation of the naira at the central bank’s bi-weekly auction put pressure on the local currency. At the official window, the central bank sold $400 million at 153.16 to the dollar, short of the $436 million demanded by end-users. The regulator sold $400 million at 152.81 to a dollar at the auction on Monday.

Traders said three oil companies, French Total, Agip and NPDC sold a total of $44.5 million to some lenders on Wednesday, but high demand reduced the impact of the inflows on the market. “We are expecting NNPC (state-owned energy company) and few others to sell dollars before Friday. This could provide some relief to the market and help support the naira, otherwise the naira will continue to depreciate,” one dealer said. Dealers also said the naira could face pressure if the central bank continued to cut its price at official window.

“The central bank is the biggest supplier of forex to the market, so if it continues to allow the depreciation of the naira at its window, then the interbank market will take a cue from that,” one dealer said.

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