21 Jan 12 CBN Governor Lamido Sanusi at the World Economic Forum on Africa
CBN Governor Lamido Sanusi indicated that he will probable allow First Rand of South Africa to acquire Sterling Bank Plc. First Rand is seeking to buy a controlling stake in Sterling Bank, which has 100 branches across Nigeria and it would allow the South African bank to have a footprint in Africa's most populous nation. For more information on Nigeria's investment climate, visit http://www.easykobo.com
Speaking at the World Economic Forum on Africa in Cape Town, Sanusi said "If they do reach an agreement that is mutually acceptable, we are most likely not to object to it, FirstRand spoke to me before they started speaking to Sterling. I did give them the go-ahead for them to talk."
Speaking further on prospect of foreign banks entering the Nigerian market, the CBN Governor said that "I'm a strong believer in allowing a healthy mix of local and foreign banks," Sanusi said. "I believe foreign banks do bring best practices, they bring risk management, they bring governance, and the connections that are good for any financial system that's trying to grow. We won't have any objections".
CBN Governor Lamido Sanusi has indicated that he could limit further interest rate increases to boost lending in Nigeria. Speaking at the World Economic Forum on Africa in Cape Town, Sanusi said "We frontloaded a lot of the increase that people thought we'd do gradually over the year".
In March the CBN concluded its monetary policy meeting by announcing a 1% increase in the key lending rate to 7.5%, the market expected an increase of 25 basis points but got a full percentage point.
Sanusi explained that "We did a massive increase relatively at the last Monetary Policy Committee, Part of what we factored in was the expectation of increased spending during elections, the increased cost of energy, the possible reduction in fuel subsidies"
Inflation surged over the past 2 months as government spending increased due to elections. The CBN faces the challenge to controlling inflation, maintaining a stable Naira rate while encouraging banks to start lending more to businesses.
Speaking to CNBC Africa, CBN Governor Lamido Sanusi said that CBN could recapitalise Oceanic Bank through the Asset Management Company of Nigeria (AMCOM), the government "bad bank" created to absorb the non performing loans from failed banks in an industry wide bailout of more than $ 4 billion.
Oceanic Bank had been in talks with First Bank of Nigeria Plc regarding possible merger or acquisition but those talks collapsed last month. Many analysts called it the end game for Oceanic Bank as the stock fell sharply. Now the stock has bounced back to N 1.87 after falling to 1.64 recently. Oceanic Bank also said that it is not desperate to sell.
Easykobo analysts covered the story in April and have a bullish target on Oceanic Bank of N 2.20 for 2011.
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