FirstRand gets toehold in Nigeria
FIRSTRAND could launch a retail banking operation in Nigeria, where the JSE-listed group has been granted an investment banking licence.
The company has for years coveted a presence in Nigeria’s retail banking sector so that it can link up with its planned retail and investment banking business in Ghana. It is finalising the purchase of Merchant Bank Ghana for about R750m.
FirstRand CEO Sizwe Nxasana said on Monday that the group’s entry into Nigeria via Rand Merchant Bank (RMB) signified its plans to become a major player in that country.
RMB has been operating a representative office in Africa’s most populous country since January 2010. It was awarded the banking licence, via FirstRand, after an initial investment of $100m.
This will make up for its failure last year to buy Sterling Bank for a reported $400m, after it stepped back from the deal because the price was too high.
FirstRand’s rival, Standard Bank, already has one of the largest banking operations in Nigeria, which could provide the impetus for it to eventually launch a retail bank in the country.
For now, RMB said it would focus on providing Nigerians with, among other products, corporate advisory services, equity capital markets, infrastructure, project and resource finance, and fixed income services.
Mr Nxasana is bullish about the group’s prospects in Nigeria, which economists expect to overtake South Africa as sub-Saharan Africa’s largest economy by 2015. "This move is consistent with our strategy as we often enter a new market through the appropriate operating franchise, in this case RMB, and the rest of the banking group may then follow," Mr Nxasana said.
RMB CEO Alan Pullinger said the licence would allow the group to rapidly build its franchise, and provide products and services to corporate and institutional clients. " Nigeria as a country, and the West African region as a whole, are experiencing significant growth.
"Although we have already established a track record through our representative office, this licence will allow us to significantly scale up our in-country offering."