FirstRand eyes Nigeria's Mainstreet, Keystone banks

FirstRand last year set up an investment bank in Nigeria and appears keen to follow that with retail operations. (Gallo)

FirstRand last year set up an investment bank in Nigeria and appears keen to follow that with retail operations. (Gallo)

FirstRand, South Africa’s second-biggest financial-services company, would consider buying Nigeria’s Mainstreet Bank or Keystone Bank to help establish a consumer-banking presence in the country.

The lenders are held by Nigeria’s Asset Management, which was set up in 2010 to nationalise and manage the banks after bad debts mounted amid allegations of corruption. Amcon, as it’s known, already asked for expressions of interest in Enterprise Bank and hopes to sell all three lenders by the end of next year, according to a statement on its website.

"We would not be interested in Enterprise but would consider both Keystone and Mainstreet," Sam Moss, director of investor relations at FirstRand, said on Wednesday. "There’s no formal process yet and we have no idea when it will start."

The three Nigerian banks were among eight bailed out by the Central Bank of Nigeria in 2009 amid a lending crisis that threatened the financial system in sub-Saharan Africa’s second- largest economy.

FirstRand last year set up an investment bank in Nigeria and wants to follow that with retail operations to help fund the unit while profiting from growth in Africa’s most populous country, with more than 160-million people.

FirstRand’s shares declined 1.3% to R32.86 on Wednesday, falling the least among South Africa’s four largest banks.

Expressions of interest
There have been more than 20 expressions of interest in Enterprise Bank, Amcon chief executive officer Mustafa Chike-Obi said on Wednesday.

Amcon is waiting on the sale advisers, Citigroup and Vetiva Capital Management, to report back after bidding closed on September 30, said Chike-Obi, who wants the sale completed "as soon as possible," he said.

"We are doing it sequentially, Enterprise first, Mainstreet second and Keystone third," Chike-Obi said, commenting on the sale process.
"We have not asked for any expressions of interest for the other two. We’re still working on the first one."

FirstRand ended talks to buy Nigeria’s Sterling Bank in 2011 after the parties were unable to agree on terms.

"Amcon has helped the banks improve on their balance sheet, but they still need further investment to compete in the industry," Bunmi Asaolu, a Lagos-based analyst at FBN Capital, said. – Bloomberg

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