By Obinna Chima I 04 Jun 2011
The merger talks between Sterling Bank Plc and FirstRand Limited, which is South Africa’s second-biggest financial-services company, has ended following the inability of both institutions to reach an agreement.
Bloomberg quoted the Johannesburg-based FirstRand to have disclosed this in a Stock Exchange filing Friday.
“The parties have been unable to agree mutually acceptable terms. The bank will continue to evaluate options regarding the company’s entry into Nigeria which offers strong underlying growth prospects in the financial industry, FirstRand said.
THISDAY had on March 17, reported that both banks were in advanced talks. Sterling Bank was not affected by the Central Bank of Nigeria (CBN) 2009 reform exercise which resulted into the bailout of some banks that were declared sick.
FirstRand has been considering opportunities in the Nigerian financial market since 2009, when the CBN invited bids for healthy and distressed banks after its intervention. The financial institution which commenced business in 1998 was founded originally as specialist investment bank. Since then, the founders, together with a long standing and stable management team, have created the second largest financial institution in South Africa.
The firm which is led by Chief Executive Officer, Sizwe Nxasana, had said that it plans to enter Nigeria, Tanzania, Angola, Ghana and Kenya. The bank had said that it preferred to enter the Nigerian market through a strategic alliance with a healthy local bank and would be looking to deploy around $300-$400 million to fund such an investment.
Reacting to the development, Banking Analysts at Renaissance Group, Mr. Adesoji Solanke, speculated that the other Nigerian banks that may be the target of the South African bank for possible entry to the Nigerian market include: Skye Bank, Diamond Bank and Fidelity Bank.
Solanke, however acknowledged that the aforementioned Nigerian banks may not be willing to agree for any merger because of their position in the market.
“We look to see how FirstRand’s Nigeria strategy takes shape from here on,” Solanke said in an e-mail to THISDAY. He also advised Sterling bank to either open discussions with another party or embark on a significant capital raising.