FirstRand’s appetite for Nigeria grows

FIRSTRAND is keen to enter the Nigerian market despite turmoil surrounding the banking sector in Africa’s most populous nation.

Sizwe Nxasana, the group’s chief executive-designate, said the bank was waiting for the second banking consolidation that would ‘probably’ take place in Nigeria soon.FirstRand wanted to be in markets that would strengthen its position as ‘a leading financial services group’, he said.’The focus is to position FirstRand as a strong regional player. We are not looking at Greenfields project there,’ Nxasana added.Paul Harris, the outgoing chief executive of FirstRand, agreed that the bank wanted to conduct business in Nigeria.’We are open for business there,’ he said. ‘The situation has been very fluid in the past couple of weeks and we want to throw our hat in the ring.’Experts have always been concerned with Nigeria’s financial sector, saying that it faced a liquidity crisis that could weed out some of its weaker banks and prompt a second round of consolidation.The first round of consolidation resulted in a number of Nigerian banks being reduced drastically following a directive from the central bank governor for the clean-up of the nation’s banking sector.Last month five Nigerian banks, which supply 40 per cent of that country’s bank credit, collapsed under the weight of unsecured debt and had to be bailed out by the government.The banking groups were allegedly doling out loans without sufficient collateral, and regulators said the bad loans came to a total of 1,14 trillion naira (N$54,7 billion).Afribank, Intercontinental Bank, Finbank, Oceanic Bank and Union Bank shared in the US$2,6 billion (N$19,2 billion) government bailout – unheard of in Nigeria until this development.FirstRand said FNB, its wholly owned retail subsidiary, would be the primary platform for banking in Africa, with Wesbank and Rand Merchant Bank utilising the platform when necessary.Momentum, the wholly owned life insurance and fund management subsidiary of the company, had built a presence in 11 African countries and would also look for opportunities to collaborate with FNB.It said there had been some progress in Namibia, where a life insurance subsidiary of FNB’s Namibian operation, had now added Momentum’s Myriad life cover offering its suite of products.The group said that it would consider corporate action and the acquisition of the right operating platforms in order to accelerate the international expansion strategy.FirstRand is currently waiting for regulatory approval for an office in Angola and has received conditional approval for an office in Nigeria.It plans to start full banking activities in Tanzania in the near future.’We are also actively looking at opportunities in other selected east and west African markets,’ Nxasana said, without identifying these markets.FirstRand said in the year to June its diverse portfolio of banking and insurance businesses produced a 32 per cent decrease in earnings to N$7,1 billion.This was against a very difficult macro background driven by losses on its international strategy.’The absolute size of retail bad debts… in the residential mortgages portfolio, combined with losses emanating from the offshore legacy portfolios in the investment bank, significantly impacted overall profitability,’ Harris said.-Business Report