Nigeria’s Sterling Bank has ended talks to buy rival Keystone Bank after finding it an unsuitable fit and is now focused on raising funds as it considers other acquisitions, its chief finance officer said on Tuesday.
“We reviewed Keystone Bank and concluded the strategic fit was not strong enough. We will continue to evaluate all the options. As new candidates come into the market, we will also review them,” CFO Abubakar Suleiman, told Reuters by phone.
Sterling Bank said in February it was aiming to buy one or two mid-sized lenders as sharp falls in the value of the naira and increased regulatory pressure forced banks to recapitalise.
Keystone Bank is the last of Nigeria’s nationalised lenders, which state-backed “bad bank” AMCON is seeking to sell.
Suleiman said Sterling’s strategic plan was still to acquire a rival in Nigeria but that any move was likely to come after studying the impact of last month’s 30 percent fall in the value of the naira.
The central bank ditched its 16-month old peg of 197 naira to the dollar in June to allow the currency to trade freely, in an effort to resolve a chronic dollar shortage that has stifled economic growth.
However, dollar shortages remain as Nigeria suffers from a plunge in oil prices which has battered its currency and stoked inflation to an almost 11-year high.
Analysts see the slowdown as catalyst for mergers.
Sterling has completed book building for a 35 billion naira bond sale, its first tranche of a debt programme, Suleiman said, but added that the bank will raise only 20 percent of that amount to gauge appetite once it receives regulatory approval.
Bond yields in Nigeria are currently below inflation at 16.5 percent in June. The most liquid 5-year government bond traded at a yield of 15.17 percent on Tuesday.
“Once we see that the structure is acceptable and yields are moderate, we will complete series one this year. If the market remains turbulent, we will do it next year,” Suleiman said.