By Odunewu Segun
Sterling Bank Plc is said to be eyeing Keystone Bank Limited and one other mid-sized commercial lender with strong presence in the northern part of the country. National Daily gathered that the targeted bank has been grappling with low liquidity in recent months due to sharp falls in the value of the naira, crude oil prices and increased regulatory pressure.
According to Sterling Bank’s CEO, Yemi Adeola, the low liquidity problems, increased regulatory pressure as well as other factors is forcing banks to recapitalise. He said his bank expected a further 20 per cent devaluation in the naira, eroding capital ratios for several of its rivals exposed to foreign currency assets and potentially triggering mergers.
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It will be recalled that the Sterling Bank Boss had disclosed late last year that six commercial banks are likely to seek mergers and acquisitions in 2016. The mergers, he said, are triggered by the shock created in their assets and balance sheet sizes in the face of declining oil prices. Crude oil prices have fallen to as low as $32.11 per barrel from over $110 per barrel a year ago. This has adversely affected banks’ oil assets. Besides, the level of non-performing loans in the sector has risen.
Adeola said he envisaged possible shrinking in the number of local banks this year. There are already moves suggesting that trend, he said, but did not name any bank. The bank chief said two international banks were discussing with local lenders on possible acquisition. He said last year was a challenging one for the economy and the banking sector, adding that banks are now finding ways to wriggle out of these challenges, including a tough regulatory environment.
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He said Sterling Bank is ready for either a merger or an acquisition, provided it will add value to stakeholders. “For us at Sterling Bank, we are always open to mergers or acquisitions. We are open to anything that can give us scale. Whether it is a merger or acquisition, we are open, but the synergy must be there. We must see the benefits clearly. Any merger must be one that ensures stakeholders will benefit more; otherwise it will not be worthwhile, he added.