First Rand Ltd, Africa’s largest bank is seeking to acquire a mid-sized bank in Nigeria, to help fund Rand Merchant Bank’s operations in the country. Rand Merchant Bank is its investment banking subsidiary and has been operating in Nigeria since 2012. The bank considers Nigeria as a market, too important to ignore.

The bank which was in talks to buy Sterling Bank Plc in 2011, walked away because the asking price was too much. Talks with two other lenders collapsed due to issues surrounding the valuation of assets; or the amount of provisions set aside for bad and doubtful debts.

First Rand is seeing opportunities during Nigeria’s economic crises, as it presents a buying opportunity. According to its Chairman, Laurie Dippenaar, the bank is still considering one other target and would prefer an institution with a large branch network.

“Deals crop up,” Dippenaar, 68, said in an interview at the World Economic Forum in Davos, Switzerland. “And the tougher it gets with the oil price, we get approached.”

Nigeria is currently battling an economic crises that has resulted in its first recession in over 25 years. A drastic fall in oil prices in addition to wrong policies has led to a plunge in the Naira value; and foreign currency shortages. This has affected its small and medium sized banks; with bad loans above the regulatory limit and capital adequacy ratios declining.

STOCK VALUATIONS

The Nigerian Stock exchange declined 6.12% (approx 40% in dollars) in 2016; as a result of the troubling economy and exit of foreign investors from the market.

Most bank shares declined in prices with some having steep declines of more than 40%.

First Rand would be open to recapitalizing a bank if needed as part of the acquisition deal, according to Dippenaar, declining to be specific on which bank they are targeting.

“We’re not going to make a reckless decision or grossly overpay, “We’ll keep looking until we find something that fits” he emphasized.

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ernie4life:
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Bros, do you work in keystone?, this one you dey hustle for buyer

ernie4life:
They should buy keystone nah