FirstRand, South Africa’s second largest bank is in advanced talks with Sterling Bank Plc over making a strategic investment in the local bank, sources familiar with the deal said Wednesday.

Banking sources said FirstRand preferred to enter into the Nigerian market through a strategic alliance with a healthy bank and it intends to deploy about N62.669 billion ($400 million) to fund such an investment.

Industry sources said the discussion between the banks commenced about two years ago.
Sterling Bank was not affected by the Central Bank of Nigeria (CBN) 2009 reform exercise which resulted into the bailout of some banks that were declared sick.

THISDAY check showed that Sterling Bank has a total market capitalisation of N30.528 billion as at Wednesday, just as it share price on the Nigerian Stock Exchange (NSE) closed at N2.43 per share. Both FirstRand and Sterling Bank declined to comment on the transaction.

On the other hand, FirstRand which commenced business in 1998 was founded originally as specialist investment bank. Since then, the founders, together with a long standing and stable management team, have created the second largest financial institution in South Africa. The founders still retain a significant equity stake in FirstRand.

"FirstRand is considering making a strategic investment in Sterling Bank and the discussion has gone far" a reliable banking source who pleaded anonymity said.

Reuters quoted Managing Director, FirstRand, Sizwe Nxasana, who took over the reins of the bank over a year ago, had said that the South African bank was looking at investing "meaningful amounts of capital" in Nigeria and would fund any deal from its reserves.

It would be recalled that FirstRand was the first foreign bank to announce its interest in buying one out of the nine recued banks.
Apart from the aforementioned deal, other deals are looming in the Nigerian banking sector as new investors seek to recapitalise the rescued banks.

Banking sources said a consortium involving Vine Capital, a relatively unknown private equity firm, has put in a bid to acquire both Finbank Plc and Afribank Plc and intends to merge both banks.

While sources had also said that Habib of Pakistan plans to acquire Bank PHB, Access Bank Plc was said to have made a bid for Intercontinental Bank and First Bank of Nigeria Plc proposing to take over Oceanic Bank International Plc.Similarly, Capital Alliance consortium comprising Keffi Capital, Nick Rohatyn Group and Africa Finance Corporation (AFC) was also said to be the leading group in the contest to acquire Union Bank of Nigeria Plc.