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Mergers, Acquisitions Likely For Banks By 2016 by bcomputer101: 4:19am On Dec 18, 2015 |
Six commercial banks are likely to seek mergers and
acquisitions in the New Year – no thanks to the shock created
in their assets and balance sheet sizes in the face of declining
oil prices.
Crude oil prices have fallen to as low as $37.11 per barrel from
over $110 per barrel a year ago. This has adversely affected
banks’ oil assets.
Besides, the level of non-performing loans in the sector has
risen.
The Managing Director, Sterling Bank Plc, Yemi Adeola, who
disclosed this yesterday said he envisaged possible shrinking
in the number of local banks in the New Year. There are already
moves suggesting that trend, he said, but did not name any
bank.
Speaking at an end-of-year media briefing in Lagos, the bank
chief said two international banks were discussing with local
lenders on possible acquisition. He said the year has been a
challenging one for the economy and the banking sector,
adding that banks are now finding ways to wriggle out of these
challenges, including a tough regulatory environment.
He said oil price could also come further down, and called for a
more efficient tax system, blocking of revenue leakages and
focus on areas neglected in the past – “from agric to solid
minerals and other commodities we have in abundance. We
also need to support Small and Medium Enterprises to create
opportunities that will create jobs,” he said.
Adeola said the Nigerian banking industry was the most
regulated sector in the country thereby affecting banks’
performance.
“To say that everything will be rosy in 2016 will be deceiving
ourselves. I think if the opportunities arise for banks to pursue
further consolidation, we could see two or three. I also know
that one or two international banks are interested in pursuing
acquisitions in Nigeria and they are indeed having discussions
already,” he said.
“So, you could see a combination of one or two international
banks taking over one or two Nigerian banks or merging with
them. And nothing also stops two or three Nigerian banks
having merger discussions in 2016.”
Adeola said Sterling Bank is ready for either a merger or an
acquisition, provided it will add value to stakeholders. “For us
at Sterling Bank, we are always open to mergers or
acquisitions. We are open to anything that can give us scale.
Whether it is a merger or acquisition, we are open, but the
synergy must be there. We must see the benefits clearly. Any
merger must be one that ensures stakeholders will benefit
more; otherwise it will not be worthwhile,” he said.
Adeola added: “We have every cause to remain optimistic in
2016, despite the fact that it is going to be a challenging year
for the banking sector. We are determined to keep the
momentum going. We first started a merger of five banks, and
all the consultants predicted that all the entities will struggle for
the next 10 years. It was challenging but we got out of it.
Experience has shown globally, that mergers don’t work,
especially when you are merging five institutions.”
Adeola said Sterling Bank did first merger in 2006 and ran as a
bank from day one, despite the fact that five banks came
together. “In 2011, we did another merger with Equitorial Trust
Bank (ETB), and was done in record time and you will never see
cultural differences. We are one bank, and it means we have
perfected the act of acquisitions. Could there be an opportunity
to pursue an acquisition again, we will try,” he said.
Adeola said the foreign exchange challenge remained a tough
one for banks and the economy. “You can only spend what you
have and if our reserves are at $29.4 billion as at December 15,
there will barely fund four to five months of import. The options
are usually two: to adopt capital control and focus on key
sectors. In other words, you determine where you want the
forex to go to in order to curb wastages,” he said.
In Adeola’s view, Nigeria cannot sustain capital controls for so
long. He said the government does not want the forex to be
used for speculative purposes. “But it is a double edged sword.
If you adopt capital controls, investors are reluctant to come in,
because if they bring their money in at N200 to dollar, they will
not be able to know what rate when they are going. So, you
shut your door to new money coming in. The other option, is let
the naira find its true value. The question is what is the true
value for the naira?”
To Adeola, the right thing to do is find the true value of the naira
and devalue it from there. “Some will suggest the street value,
while others will suggest the Central Bank of Nigeria rate. But it
is also not the true value. The true value of the naira is between
the CBN rate and the parallel market rate. But there are ways
we can find the true value of the naira and devalue to that
extent. If people are sure, they are getting true value for their
dollars, then the dollars will come down,” he said.
Adeola said Sterling Bank continued to survive in spite of such
tough regulations because it plays by the rules. “We do not
flout regulations. We keep strictly to regulations. We will
continue to face challenges that come our way with maturity.
He said the bank desires to be a top six bank, from top 10
currently, and also be a leading consumer banking franchise,”
he said. source: http://thenationonlineng.net/mergers-acquisitions-likely-for-banks/ |
Re: Mergers, Acquisitions Likely For Banks By 2016 by Nobody: 4:20am On Dec 18, 2015 |
If this does not affect the daily bread of employees working in these banks, then it's fine |
Re: Mergers, Acquisitions Likely For Banks By 2016 by lovesamzy: 4:56am On Dec 18, 2015 |
policy to police |
Re: Mergers, Acquisitions Likely For Banks By 2016 by kokozain(m): 5:16am On Dec 18, 2015 |
This is eye opener for investors |
Re: Mergers, Acquisitions Likely For Banks By 2016 by millhouse: 1:30pm On Dec 18, 2015 |
see opportunity |
Re: Mergers, Acquisitions Likely For Banks By 2016 by iseeicome: 9:40am On Sep 08, 2017 |
(1) (Reply)
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