Fidelity Bank eyes acquisitions, growth

Reginald Ihejiahi, chief executive officer of Fidelity Bank.

Fidelity Bank wants to expand rapidly to become one of the country's top three lenders, growing organically and potentially through acquisitions, its chief executive said on Friday.

Reginald Ihejiahi said the bank is still interested in buying local rival Afribank, one of nine lenders rescued in a $4 billion bailout last year, even though it has picked a private equity consortium as its preferred bidder.

"With regards to the Afribank transaction, I will just say that these are early days yet. It's a transaction we are still waiting on," Mr Ihejiahi told Reuters in an interview in the commercial capital Lagos. "We will do an acquisition if the price is right, if the contractual terms are right."

Banking sources said last week that a consortium of private equity investors had emerged as the preferred bidder for Afribank with Fidelity as the reserve bidder but Afribank made it clear that it's in talks with potential investors but gave no details.

Industry sources estimate private equity bidders would need to raise up to 30 billion naira to bring Afribank up to minimum capital requirement levels after state-run "bad bank" AMCON absorbs all of its non-performing loans.

AMCON was set up to help recapitalise the nine rescued banks by absorbing their bad loans in an effort to restore lending in sub-Saharan Africa's second biggest economy. It will also buy margin loans from across the wider banking sector.

Mr Ihejiahi said Fidelity had disclosed all of its non-performing loans (NPLs) to AMCON and wanted to sell them "We want to sell 100 percent, we have no reason not to do that ... We have very little margin loans, we have about 5 billion naira," he said, adding that bank chiefs had met with AMCON on Thursday to discuss the process.

"They said they would like to focus on margin loans but (AMCON) has assured that before you get to the second quarter of 2011 they will have taken up all the NPLs," Mr Ihejiahi said.

He said the bank expects to grow its branch network to 200 branches from a current 181 before the second quarter of 2011 and that it planned to apply for an international banking licence by the end of the year.

The central bank has said it will stop issuing universal banking licences in a bid to avoid a repeat of last year's near collapse of several lenders which led to the bailout.

The regulator wants to separate banks' core lending business from more speculative capital markets activities -- such as stockbroking, asset management, private equity and venture capital -- to protect depositors' funds.

Under the guidelines, lenders will now operate as regional, national or international banks with varying minimum capital requirements.

"We are asking for their approval for us to be a commercial bank which has an international aspiration ... We plan to put in our application before the year runs out," Mr Ihejiahi said, adding Fidelity would sell subsidiaries as needed.

Source:http://234next.com/