One of Nigeria’s tier-1 banks, First Bank Plc, is considering merger and acquisition plans with two commercial banks in the country.
The banks are Heritage Bank and Polaris Bank, formerly Skye Bank.
The scheme, according to banking sources, is part of the recapitalisation process that is projected to happen in Nigeria’s banking space this year.
According to financial express, bank recapitalisation is the inflow of additional capital into a financial institution to improve the balance sheet.
In Nigeria, banks are expected to raise their capital base above the N25 billion minimum introduced by CBN in 2004.
Discussions ongoing
A top source at Polaris Bank told Business Insider SSA on Thursday, March 12th, 2020, that the news about merging Polaris Bank, formerly Skye Bank, with First Bank surfaced within the offices, weeks ago.
“It is true, in-house, so many discussions around the merger recently. But I think the discussions are still at the prime stage of regulatory hurdles. You know Polaris is a bridge bank. So it will require more talks from both parties,” the source said.
On Thursday, one of Nigeria’s local newspapers, Independent Newspaper, broke the news of the merger talks. The report stated that “financial advisers of the banks are putting touches on a merger arrangement between the three banks.”
“It is possible, the move will create one of Nigeria’s biggest banks, and it is part of the recapitalisation efforts of the Central Bank of Nigeria,” another source, who pleaded anonymity, said on Friday.
“You know how this thing works, First Bank Plc would not want to talk about it since there’s no concrete conclusion yet.”
First Bank of Nigeria said it will only consider inorganic growth when it is value accretive to shareholders and other key stakeholders.
In a statement issued on Friday, March 13th, 2020, Seye Kosoko, Secretary at FBN Holdings Plc, said FirstBank will continue to scan Sub Saharan Africa in general for potential acquisition. In line with “…the evolution of potential consolidation in the Nigerian Banking Industry. There will always be speculation on FirstBank’s involvement on account of its size, liquidity, systemic importance and historic support in backstopping the industry.
“FBN Holdings Plc is mindful of its responsibilities as a Premium Board listed company and will make appropriate disclosures should it find such value.”
In 2019, CBN governor, Godwin Emefiele, said that there would be new banking consolidation. He said the new capital will help lenders to meet customers’ credit needs and contribute to economic growth. In 2018, seven commercial banks failed stress test in adequate funding.
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