Sterling Bank mulls acquisitions to build scale

15 Feb 2016
Chibuike Oguh


In December last year, Sterling Bank’s CEO reportedly said the bank is open to merger or acquisition talks.

Razack Adeyemi Adeola,

Sterling Bank, a mid-sized Nigerian bank, is considering the acquisition of one or two other mid-sized banks to build scale as oil price shocks have led to weak market conditions and slow economic growth in Nigeria.

Sterling Bank’s Chief Financial Officer, Abubakar Suleiman, told Reuters last week that the bank expects several Nigerian banks to become acquisition targets this year because of a possible 20 percent devaluation of the naira. He said this will erode the capital adequacy ratios of several Nigerian banks with foreign currency loan assets.

This follows a discussion in December last year, when Yemi Adeola, Sterling Bank’s CEO, reportedly said the bank is open to merger or acquisition talks as the slowdown in the economy coupled with the currency weakness provided opportunities for consolidation.

"You could see ... one or two international banks taking over one or two Nigerian banks ... in 2016 from the look of things," Adeola told Reuters. "As for us at Sterling, we are always open, anything that will give us scale, we will pursue."

Sterling Bank is a product of the merger of six small Nigerian banks – NAL Bank, Magnum Trust Bank, NBM Bank, Trust Bank of Africa, Indo-Nigeria Merchant Bank, and Equitorial Trust Bank.

In 2011, Sterling Bank held discussions with FirstRand Bank, South Africa’s second largest bank after Standard Bank, over a possible take over. However, both parties ended talks after failing to agree on mutually acceptable terms.

Sterling Bank’s shares closed at N1.75 at the end of trading at the Nigerian Stock Exchange on Monday. The bank’s market capitalization stood at N50.38 billion (about $250 million).

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