FirstRand Is Still Interested In Nigerian Commercial Banking Sector

Aldermore

While many investors are looking away from Nigeria, FirstRand, Africa’s largest bank by value is said to be looking at acquiring a deposit money bank in Nigeria as soon as practicable.

Nigeria is becoming attractive to investors who can weather the storm as prices for acquisition would have com down due to the devaluation of the Naira and the fall in oil prices which has caused the worst Forex drought in the history of Nigeria.

FirstRand’s Chairman Laurie Dippenaar confirmed this in its annual report that:

“Asset prices in jurisdictions such as Nigeria have recently become much more realistic. We feel more comfortable to look for opportunities to deploy shareholder capital for acquisitions to assist us in scaling up our operations. FirstRand remains committed to growing outside of South Africa on the back of a strategy that is both organic and acquisitive.”

Bloomberg confirmed that FirstRand walked away from buying control of Lagos-based Sterling Bank Plc in 2011 after it was unwilling to meet the sellers’ price demands. The lender’s investment-banking unit is already operating in Nigeria and in 2012, FirstRand said it was looking for an acquisition to help fund Rand Merchant Bank’s operations in the West African nation. It’s only now that Nigeria’s naira has been devalued and banks’ bad-debt levels are soaring as that economy slows, that asset prices have declined.
While FirstRand “will remain disciplined and definitely not squander shareholders’ capital on seemingly cheap earnings,” it sees the rest of Africa as a long-term growth opportunity, Dippenaar said. The lender is “very focused on creating more of a portfolio effect to reduce concentrations and diversify risk,” he said.

The bank already has Rand Merchant Bank in Nigeria, operating as an investment bank. RMB has done various deals in Nigeria’s retail real estate development sector for mostly companies who came from South Africa.

The group manages a portfolio of banking and financial services companies including RMB, FNB, WesBank and AshBurton Investments.

After the botched takeover of Sterling Bank, Sterling Bank had tried to acquire Keystone Bank, but backtracked, analysts perceived the change of mind as a result of its inability to carry the huge non-performing loans in the books of Keystone Bank.

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