Johannesburg - Standard Bank Group was negotiating to buy a minority stake in Nigeria's Oceanic Bank International in a deal said to be worth between $200 million (R1.34 billion) and $300 million, the lender said yesterday.
The deal, which also sees Oceanic taking over Standard's Nigerian unit, Stanbic, ensures that both banks comply with new capital requirements due to come into force in Nigeria on December 31.
"Discussions will be finalised on the satisfactory conclusion of a due diligence exercise and obtaining all necessary regulatory approvals," said Africa's biggest lender.
Nigeria has attracted investment from South African companies such as cellular operator MTN Group that are seeking to expand into Africa's most populous nation.
Standard Bank has over 315 branches and about 1 million customers in 16 African nations outside South Africa, including Nigeria, which has the second-biggest economy on the continent south of the Sahara desert.
Last year Standard Bank was beaten by Standard Trust, Nigeria's third-biggest lender, in a bid to buy Lagos-based United Bank for Africa. The takeover created west Africa's largest lender.
Nigerian banking has been in the throes of a forced consolidation since the new capital requirement of 25 billion naira (R1.28 billion) was announced last year.
There are 23 new banking groups comprising more than 80 formerly independent banks, most of which are expected to complete their mergers before the end of the year. Three independent banks are expected to meet the new minimum alone.
A handful of banks are expected to collapse or go into liquidation; however, the central bank has said that it expected 97 percent of the industry to sail through. Standard Bank would bring in some new capital to Oceanic and buy existing shares to build up its stake, said another source.
The Standard Bank deal brings to three the number of big international names with a presence in Nigeria's new banking scene. The other two are Nigeria International Bank, a unit of US-based Citigroup, and Britain's Standard Chartered Bank.
Attempts by some big global banks to acquire the top three Nigerian banks have been spurned by the central bank, which argues that Nigeria needs to encourage home-grown capital.
The sector has surpassed expectations by raising 264 billion naira from the local stock market through equity issues since July 2004.
Oceanic, which posted net income of 3.29 billion naira in the fiscal year to September 2004, was founded by the Ibru family in 1990 and has been publicly traded since June last year. The Ibru family owned a 48.4 percent stake in the business, said Standard Bank.
Oceanic has 84 branches, mainly in the country's southern states, and 400 000 customers, most of whom are companies or affluent people. It employs 1 114 people. Standard has a market value of R96.5 billion. Abuja-based Oceanic has a market value of 37.9 billion naira.
Standard Bank shares remained unchanged at R71.20 on Friday. The banks sector lost 0.69 percent.