FirstRand Ltd. (FSR), South Africa’s second-largest bank, needs to buy a retail and commercial lender in Nigeria to support its investment bank and win access to consumer deposits for corporate funding, said Alan Pullinger, the unit’s chief executive officer.
“In Nigeria, you want a funding bank,” Pullinger, who heads FirstRand’s Rand Merchant Bank, said in an interview in Johannesburg yesterday. The investment bank, which won final approval for Nigerian license last month, “has legs for a while and we can carry it through the short term, but long term we want to get into retail and commercial banking,” he said.
FirstRand said on Aug. 22 that it agreed to buy a 75 percent stake in Merchant Bank Ghana Ltd. for 746.2 million rand ($86 million) to strengthen its position in Africa after earlier this year ending talks to purchase Lagos-based Sterling Bank Plc. The investment-banking unit has 12 people in its Nigerian office and plans to expand its workforce in Africa’s largest oil producer to about 20, Pullinger said. To continue lending to companies, it needs to have access to deposits, he said.
“We are exploring various options in Nigeria, including the assets which form part of the Asset Management Corp. of Nigeria,” said Sam Moss, a director of FirstRand, commenting on an agency set up to buy bad debt from the nation’s banks. In Ghana, the central bank still needs to give its approval for the Merchant Bank deal, she said.
FirstRand, which is the best-performing stock among South Africa’s four largest banks this year, dropped 1.6 percent at 1:41 p.m. in Johannesburg.
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