South Africa’s First Rand Ltd. bank is looking to acquire a bridge bank in Nigeria to fund its recently launched investment arm Rand Merchant Bank.
The investment bank requires further funds in order to expand into retail and commercial banking and support its long-term endeavours, as such the bank is on the look-out for potential acquisitions.
It has in particular pinpointed three bridge banks currently held by the Asset Management Corporation of Nigeria (AMCON) as potential acquisitions; the three being Keystone Bank, Enterprise Bank, and Mainstreet Bank.
“We are exploring various options in Nigeria, including the assets which form part of the Asset Management Corporation of Nigeria ,” Sam Moss, a director at FirstRand revealed, according to Business Day.
Meanwhile, Alan Pullinger, chief executive officer of Rand Merchant Bank, explained the acquisition plans to Business Day, saying: “In Nigeria , you want a funding bank,” adding that the investment banking branch: “has legs for a while and we can carry it through the short term, but long term, we want to get into retail and commercial banking.”
The three bridge banks in question stem from defunct banks Bank PHB, Spring Bank and Afribank respectively, which were declared insolvent and liquidated by the Central Bank of Nigeria in 2011 following the banks’ inability to grow capitalisation.
Purchased by AMCON in 2011, the bridge banks have since seen cash injections by the asset management company totalling 679 billion naira ($4.3 billion), and most recently AMCON has appointed asset management specialists to all three of the banks whose recommendations are set to be considered early in the New Year.
“Six months from now, we will share the advice we got from them,” Managing Director of AMCON Mustafa Chike-Obi told Business Day.
He went on to voice positive predictions for the future of the banks, saying: “But right now, we are proceeding and we’re absolutely sure we are heading in the direction of positive turnover.”
As such, First Rand will be keeping a close eye on developments at AMCON, with a view to acquiring one of the alleged growing bridge banks to boost funds.