22 August 2012

Nigeria: 'FCMB-Finbank Integration Delay Is Costing N1.5 Billion Quarterly '

First City Monument Bank Plc (FCMB) has said the delay in concluding its business integration process with Finbank, which it acquired last year is costing it about N1.5 billion a month.

Group Managing Director / Chief Executive Officer, FCMB, Mr. Ladi Balogun, disclosed this in an exclusive interview with THISDAY.

FCMB had last year, acquired FinBank, a former rescued bank and informed its customers that the deal would be concluded two months ago.

But Balogun who expressed frustration over the delay, described it as "one of the occupational hazards of operating in this market."

The FCMB boss attributed the development to the capital market probe by the National Assembly.

"The delay in the merger is costing us about N400 or N500 million a month in synergy benefits that we had identified. So it means that every quarter, our profit is about N1.5 billion less than it should have been. But we are near the end of that.

"Our transaction was caught up in the unfortunate tension between the National Assembly and the Securities and Exchange Commission (SEC). The tension led to a significant delay."

Although Balogun admitted that the delay could be affecting the performance of FCMB's share price on the Nigerian Stock Exchange, he advised shareholders of the bank to be tolerant.

FCMB's share price closed at N3.05 per share last Friday, representing a decline by 4.7 per cent this year, over the N3.20 per share it stood as at closing bell of August 1.

"It is a long-term game and those that have the patience to sit it up, will ultimately be the winners. We are very convinced that the benefits of the deal are significant. The merger is on track and we believe that once it is concluded, all stakeholders would be very happy," he explained.

He also assured that the process would be concluded in the next two months.

Commenting on the retail banking strategy of the bank, Balogun revealed that FCMB disburses over 10,000 personal loans monthly.

He explained: "That amount is growing every month and we doing it with less than two per cent of those loans going into default and even when they go into default, the loss is not 100 per cent. So, we are very active in that space and you will see that in the next few years a lot of innovations are going to be in the area of retail finance because we believe that interest rates would not always be high in Nigeria.

"We feel that the corporates are already over banked. They can get money in Nigeria and they can also get money internationally. We will lend to some of them, but we cannot lend to all. But we see the retail segment as heavily under banked. Our position is that as a supportive bank, it is critical that our credit focus should be on the consumer space."

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