Sterling Bank says it is no longer going along with plans for mergers and acquisitions and instead focus instead on organic growth driven by retail customers, according to Abubakar Suleiman, its chief financial officer.
Sterling’s strategic plan had been to buy another Nigerian bank, including mid-sized Keystone Bank, for which made to raise funds while looking at other targets, based on the expectation that a 30% fall in the value of the naira last year would put pressure on banks to consolidate to recapitalise.
Reuters on Friday reported Suleiman as saying most rivals were too expensive and did not offer many merger benefits that would add value.
Suleiman said Sterling would issue a N27 billion bond this year to boost lending. He said the bank expected to get clarity on the economy by the end of the quarter, including interest rates. He said the bank raised only N8 billion last year via bonds because of high interest rates.
“I don’t see any candidate right now … and nobody is selling cheap, so it’s probably easier to grow organically,” he told Reuters by telephone.
Several other Nigerian banks have also shifted their business models after low crude prices helped to push the economy into its first recession in a quarter of a century.
Wema Bank, Reuters continued, is focusing on attracting more retail customers via digital banking, while Fidelity Bank is looking to boost retail customers, while FCMB has closed branches.
Sterling had hoped that official Naira devaluation would push rivals to seek fresh equity capital, however, “no material devaluation has happened yet,” Suleiman said, adding that it was now unlikely assuming Nigeria continues to build reserves.
