First Bank Plc has disclosed its intention for international acquisitions and merger, saying that there are discussions on international deals that would help restructure the bank for the challenges ahead.
Bisi Onasanya, managing director and chief executive officer of the bank who disclosed this development added that the bank intends to finance the proposed acquisition in Nigeria and abroad with about $3.3 billion.
He said Nigeria remained the most attractive market in sub-Saharan Africa for First Bank and that it also intended to continue its domestic consolidation efforts adding that they will diagnose the candidate very well and only candidates that will add greater value to the First Bank balance sheet to be considered.
The Central Bank of Nigeria (CBN) has said it expects a second round of consolidation in the banking industry. The CBN has injected N600 billion ($4 billion) into the banking industry as bail out to rescued some banks. It injected N400 billion into Afribank, Finbank , Intercontinental Bank, Oceanic Bank and Union Bank in August this year and sacked top executives after an audit found lax governance had left them so weakly capitalised they posed a systemic risk.
The apex bank also disclosed that, it was providing another N200 billion to four more banks, Bank PHB, Equitorial Trust Bank, Spring Bank and Wema Bank also judged to be facing grave liquidity risk. The CBN has said that the rescued banks will be run as going concerns until new investors can be found to recapitalise them.
Renaissance Capital, in a report recently said, it expected First Bank, Guaranty Trust Bank, United Bank for Africa and Zenith Bank, to emerge as clear leaders in the Nigerian banking sector six months through September, from N23.7 billion in the same period a year earlier. Revenue rose to N128.1 billion from N96.9 billion.
Eurasia Group, a New York-based research company, said in May that Nigeria’s banks may have as much as $10 billion of toxic assets. It stressed that two thirds of that bad debt is partly due to at least N1 trillion margin loans used to buy equities as they soared almost 13-fold since 2000, according to Bank of America Corp. The Nigerian Stock Exchange’s All-Share index fell 46 percent in 2008 and has lost 31 percent so far this year.
Funso Doherty, head of Lagos-based ARM Pensions, a fund-management firm said First Bank’s results are “not surprising to anybody given what other banks have been reporting because of the debt crisis in the industry”. Ecobank Nigeria Plc, the country’s fifth-biggest lender by market value, earlier reported a third-quarter loss after making a N33.4 billion provision for losses from bad loans.
Governor Lamido Sanusi removed the chief executive officers of eight banks and injected N620 billion into the banks to boost their capital and liquidity. First Bank shares have dropped 18 percent so far this year, outperforming the exchange’s benchmark index.