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Nigeria Sees Two Banks Sign Takeover Deals, Central Bank Says

March 4 (Bloomberg) -- Two Nigerian lenders bailed out by the central bank in 2009 have signed accords to receive more capital, either through mergers or acquisitions, and four others are close to signing takeover agreements, central bank Governor Lamido Sanusi said.

“I can confirm that two banks have signed memorandums of understanding, I’m just not able to disclose their names because we do have an approval waiting from the Securities and Exchange Commission,” Sanusi said in an interview in London today. “One signed almost two weeks ago and one signed yesterday. We have two that are ready to sign in the next week or two,” and two others that are also close.

The transactions are part of plans by the Central Bank of Nigeria to recapitalize the banking system after the industry neared collapse following a debt crisis. The central bank fired the chief executives of eight of the country’s 24 banks and bailed out the industry with 620 billion naira ($4 billion).

Nine Nigerian lenders were in a “grave situation” and one was undercapitalized after the crisis, said Sanusi. Since then, Wema Bank Plc and Unity Bank Plc have fixed their problems, he said.

While the banks have signed accords and four others are close to signing, agreements with another two lenders have been held up by “thorny issues,” Sanusi said. The other two banks in financial trouble are are “very tiny” and “frankly are not causing us too much concern,” he said.

Takeover Bets

Nigeria’s banking industry will have as many as eight mergers in the “near future,” most of them within weeks, Deputy Governor Kingsley Moghalu said Feb. 22.

BusinessDay on Feb. 21 reported at least four of the 10 banks that failed the central bank’s 2009 audit will sign buyout accords with investors before the end February.

Vine Capital will sign an agreement to buy Afribank Nigeria Plc, the Lagos-based newspaper reported, without saying how it got the information. Access Bank Plc will invest in Intercontinental Bank Plc, while First Bank of Nigeria Plc will take a stake in Oceanic Bank International Plc, it said. First City Monument Bank Plc plans to invest in Finbank Plc, it said. Capital Alliance will sign an agreement with Union Bank of Nigeria Plc, according to the newspaper.

Asset Management Corp. of Nigeria, a state-owned company, is seeking approval from the central bank to start the second phase of its program to buy bad debts from banks, Chief Executive Officer Mustapha Chike-Obi said Feb. 22.

Amcon, as the company is known, on Dec. 31 signed debt purchase agreements with 21 of Nigeria’s 24 banks and issued 1.04 trillion naira ($6.8 billion) of so-called consideration bonds that are not tradable to buy non-performing loans from them.

To contact the reporters on this story: Chris Kay in London at; Philip Sanders in London at

To contact the editor responsible for this story: Gavin Serkin at

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