Harare — SOUTH African investment banking and asset management group Rand Merchant Bank (RMB), is likely to pass Zimbabwe on its continental expansion drive, despite the country's "interesting" investment opportunities, an executive revealed.

Chief executive Alan Pullinger was recently quoted in the South African press saying his group was seeking to grow into East and West African markets and was currently in exploratory talks with a Nigerian party.

Describing Zimbabwe as an interesting market, Pillinger said he was however, cautious about expanding into the country, even if a power sharing deal between ZANU-PF and the Movement for Democratic Change could be reached.

"I do think some of these issues are getting close to the end now and ... change is inevitable in Zimbabwe," he said. "You don't want to risk going in too early, but I think it is a very interesting market."

Pullinger said that his focus for RMB would be on growth opportunities, singling out Kenya and Nigeria as countries where the company could seek to expand its investment banking business.

"I think, ultimately, the issue that would face RMB is one of growth and that's where I think my focus would be -- on sustainable and profitable growth opportunities," he said.

"We're interested in opportunities in west Africa and we're interested in opportunities in east Africa. Our strategy may be to try target one or two countries in each region. Kenya and Nigeria are probably good examples."

Pullinger said RMB was in exploratory talks with a party in Nigeria, but would not give further details. He said RMB would like to go into private equity in that country.

But he added that RMB was not seeking to expand rapidly on the continent, which has benefited from investment fund flows because of high global commodity prices, perceived greater political stability and an improvement in communications infrastructure.

Pullinger believed South Africa's interest rate cycle had peaked, but warned that the bad debt cycle, which had hit the financial sector, had not yet turned around.

Absa, Nedbank and Standard Bank all warned recently of mounting bad debts at their retail banking units, which have been hit by a slowdown in consumer demand due to rising borrowing costs.

The central bank of South Africa has raised interest rates by a total of 500 basis points since June 2006, but its decision last month to keep rates steady spurred hopes that Africa's biggest economy had seen the peak of its interest rates cycle.