Nigeria has awarded South Africa-based Rand Merchant Bank (RMB) a merchant banking licence permitting it to establish a corporate and investment company.
According to Sizwe Nxasana, CEO of FirstRand group, parent company of RMB, the bank would begin business in Nigeria by December either by acquiring a retail and commercial bank in the west African nation, or by launching a whole new firm.
Last year, it almost closed a deal for the acquisition of Nigeria’s Sterling Bank for an estimated $400 million but backed out because of the acquisition cost, which it felt was overpriced.
The eventual introduction into the Nigerian market presents good opportunities for FirstRand which had been eyeing the infrastructure and oil and gas sectors of Africa’s second largest economy.
According to Renaissance Capital analysts, by 2014, the rebasing of Nigeria’s gross domestic product figures could lead to overtaking South Africa as the largest economy in Africa.
FirstRand’s Nxasana stated RMB would benefit from Nigeria’s fast-rising economy.
The CEO while speaking at the launching of FirstRand in India said: “Other than our representative offices in London and Dubai, we have no desire to become a global (banking group) and Africa is going to be the focus in the medium term.”
The group has aggressively pursued expansion into different regions of the African market. Recently, it established presence in East Africa, operating from Kenya and financing Kenya-India trade.
RMB whose adjusted first-half earnings dipped 8 percent to R3.6 billion ($433 million) has had to recapitalize and restructure, following stiffer investment banking competition amidst stringer capital requirements.
Rand Merchant Bank is the investment banking arm of FirstRand Bank Limited, with presence across 35 African countries, the UK, India, China, and the Middle East.