Potential Bidders Show Interest In Nigerian Banks: Central Bank

CBN GOVERNOR, LAMIDO SANUSI.

Nigeria's central bank said on Thursday it had received interest from several potential bidders for stakes in some of the 10 banks it is seeking to recapitalise following a $4 billion bailout earlier this year.

Banking sources said the central bank's advisers had set a Thursday deadline for potential bidders to register expressions of interest, a move to test the appetite for acquisitions as the regulator seeks to reshape Nigeria's banking landscape.

"We've received some interesting bids for some of the banks and the process is ongoing. It's a business transaction and we have to allow it to complete," Central Bank Governor Lamido Sanusi told Reuters during a trip to neighbouring Ghana.

He declined to comment further or give any details on which banks had expressed interest.

Nigeria's 24 banks have been positioning themselves for a second round of consolidation since an industry audit, which led to the bailout, exposed the strengths and weaknesses of rivals.

Stricter accounting rules, including the introduction of a harmonised calendar year-end and a requirement to detail full provisioning for loan losses, have further laid bare balance sheet realities long hidden by opaque disclosure levels.

The central bank has said the rescued banks -- Afribank, Finbank, Intercontinental Bank, Oceanic Bank, Union Bank, Bank PHB, Equitorial Trust Bank, Spring Bank and Wema Bank -- will be run as going concerns until new investors can be found to recapitalise them.

Unity Bank was also judged by auditors to have insufficient capital and was given until the end of June to raise fresh funds. It was not given an emergency capital injection because it had a healthy liquidity position.

Although the regulator has said it would welcome bids by foreign institutions, mid-tier Nigerian banks which came through the audit intact are expected to use the opportunity to increase the scale of their operations.

"A lot of the banks in Nigeria are interested in getting the deal done," said one senior banker, who asked not to be named.

BAD LOANS NEED ABSORBING

The central bank's advisers -- who include Germany's Deutsche Bank, South Africa's Standard Bank and Nigerian financial services firm Chapel Hill Denham -- had requested in a letter to potential buyers that they state in writing whether or not they were interested, sources said.

"The letter had no timelines to the completion of any deal," the senior banker said. Potential bidders were invited to express interest in up to three of the rescued banks.

The nine bailed out banks made provisions by the end of September of more than 2.2 trillion naira for loan losses. Potential investors are waiting to see how quickly an asset management company (AMC) can be set up to soak up bad and make the banks attractive.

Legislation to form an AMC, which would exchange bad bank loans for government bonds, is before parliament. Sanusi had hoped the legislation would be ready be the end of December but acknowledged that looked set to slip.

"Now it's looking like we may spill into early January because there were all sorts of holidays ... we're still optimistic we should get it out of the House of Representatives committee before they go on recess," Sanusi said, adding that he held a "very positive" meeting with lawmakers on Tuesday.

Sanusi has said the consolidation process could leave just 15 surviving banks in sub-Saharan Africa's second biggest economy, although he has said he has no specific target and that he will limit any one institution to 20 percent market share.

The head of Nigeria's Fidelity Bank told Reuters last month his bank was interested in buying one of the rescued banks and was awaiting guidelines on how a bid would proceed.

First Bank said in early November it intended to use a planned 500 billion naira bond to help fund acquisitions both in Nigeria and abroad.

Industry analysts say mid-tier banks Access Bank, Diamond Bank, FCMB and Skye Bank are also seen as potential bidders.