State Bank of India shows interest in Nigerian bank

This is even as bank chiefs have confirmed to BUSINESS DAY that some of the foreign banks that were angling to acquire or merge with Nigerian banks are slowing down their moves, awaiting later stages of the consolidation process.
Finance industry sources told BUSINESS DAY in Lagos last night that the State Bank of India, which is presently operating in Nigeria through its subsidiary, Indo-Nigerian Bank Limited since 1981, has shown interest in the consolidation process in Nigerian banking industry.
The source who revealed that the arrangement has been on for some months, said that what has been delaying the announcement of the merger arrangement was the late release of some documents by the Central Bank of India. He said the documents have been released and faxed to the Nigerian bank on Wednesday.
When this merger arrangement is announced next week, it will be the first instance of a foreign bank actually participating in the on-going consolidation exercise.
Although the name of the Nigerian bank is being withheld, industry sources say the bank may be one of the nations oldest merchant banks that later converted to universal banking and which will soon approach the capital market for fresh funds.
State Bank of India is currently ranked among the top 100 international banks. Together with its associate banks, the bank has a network in India of about 13,600 branches.
Its international presence currently totals up to some 54 offices in 28 countries snapping all the zones. As a group, it has a balance sheet size exceeding US$125 billion and a net profit of over US$1 billion as at March 31 2004.
Three top-notch international financial and credit rating firms have endorsed the bank’s financial strength and future. Standard and Poor’s Rating Services (S&P) have rated SBI’s foreign currency senior unsecured debt at “BB+â€? with stable outlook. Moody’s have rated SBI’s senior foreign currency debt as “Baa2â€? as against “Baa3â€? of Indian Sovereign Debt Rating. Fitch Rating gives “BB+ “ (stable) to SBI’s long term foreign currency debt.
However, bank chiefs confirmed to BUSINESS DAY in Lagos that some of the foreign banks from South Africa, Middle East and Europe that had earlier shown interest in merging with or acquiring Nigerian banks may have started withdrawing their intentions.
For example, Alex Okoh, managing director/chief executive officer of NNB International told BUSINESS DAY on Wednesday that from what he has noticed, they are showing apprehension in taking part in the consolidation process at this stage.
“There will be many stages of this consolidation, this is the first stage. A bank from South Africa, or from the UK that wants to invest in a bank in Nigeria that it is not sure of making the N25 billion will be apprehensive with what will happen to that investment in the event that they are not able to make the N25 billion.
“They may probably wait until you actually make the N25 billion or have a good chance of making it before they come in to take part in the consolidation programme. The Nigerian economy suggests that they go in that direction. It is attractive to them but they also need to be sure. Some could come in the second and third stages. But they are being cautiousâ€?, he said.
Another executive director of a first generation bank also told BUSINESS DAY that though the foreign banks are interested in investing in Nigerian banks recent events in the nation economy are discouraging them.