29 October 2010

Nigeria: FCMB Makes Bid for Finbank

Efforts by the nine banks rescued by the Central Bank of Nigeria to recapitalise appear to be looking promising with the interest indicated by First City Monument Bank Plc to acquire FinBank Plc, Reuters said yesterday, quoting banking sources.FinBank was one of the nine banks the CBN rescued in last year's N620 billion bailout.

Sources at FCMB and FinBank confirmed this development. "We have made a bid. I think ours is the preferred bid but we have not been announced as the winner yet," a source at FCMB who did not want to disclose his identity said.

FinBank earlier told the Nigerian Stock Exchange in a notice that it was in talks with a potential strategic investor about recapitalisation.

FinBank also confirmed in an advertorial in one of the national dallies that it had entered into negotiations with a strategic partner but declined to name the partner.

"The board of directors of FinBank is pleased to announce that the bank in compliance with its business Continuation Plan has entered into negotiations with a strategic investor, which, if successful, could lead to the recapitalisation of the bank."

It added that the finalisation of in any transaction is still subject to shareholders and regulatory approvals. The bank stated that further amendments will be made as any material events occur.

When contacted, however, an official in FinBank said that various investors have shown interest in the bank but to narrow down to one particular investor at this point in time would be premature.

The Communications Office of FCMB could not also authenticate the story when THISDAY contacted the bank yesterday.

FinBank, which recently released its third quarter result, has maintained a steady growth trajectory since the current management took over last year. Given the slowdown of activities in the financial services sector occasioned by the credit squeeze, analysts said that the result showed a consolidation of the growth trend observed in the first and second quarters of the year.

Its latest result showed a pre-tax profit of N3.79 billion in the Q3 result for

the period ended September 2010, compared with a loss of N122.7 billion in the comparable period in 2009 when it made provisions for the bad loans in its books.

But its gross earnings slipped by 42 per cent to N34.8 billion in the period under review, as against N59.5 billion achieved last year. Its balance sheet also improved by 11 per cent to N174 billion, over the N157 billion it made in December 2009, while its deposits grew by 4 per cent from N197 billion to N204 billion.

A top management official of the bank revealed that the bank is concentrating on aggressive debt recovery, and has also enhanced its retail business to achieve the desired mileage in its deposit mobilisation.

FCMB, on the other hand, has over the years maintained a strong retail and investment banking pedigree, with limited exposure to non-performing loans.

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