Sterling Bank will abandon plans to buy a rival because of the high costs of doing an acquisition and focus instead on organic growth driven by retail customers, its chief financial officer said. Sterling's strategic plan had been to buy another Nigerian bank, based on the expectation that a 30 percent fall in the value of the naira last year would put pressure on banks to consolidate to recapitalise.
Abubakar Suleiman, chief finance officer, told Reuters that Sterling was now pursuing organic-led growth as most rivals were too expensive and did not offer many merger benefits that would add value.
The mid-sized bank ended talks to buy Keystone Bank last year but said at the time it wanted to raise funds as it looked at other targets.
"I don't see any candidate right now ... and nobody is selling cheap, so it's probably easier to grow organically," he told Reuters by telephone.
Several other Nigerian banks have also shifted their business models after low crude prices helped to push the economy into its first recession in a quarter of a century.
Wema Bank is focusing on attracting more retail customers via digital banking and Fidelity Bank is also looking to boost retail customers, while FCMB has closed branches.
Sterling had hoped that an official naira devaluation would push rivals to seek fresh equity capital ... But "no material devaluation has happened yet," Suleiman said, adding that it was now unlikely assuming Nigeria continues to build reserves.
The naira lost a third of its official value last year and has been trading at a premium on the black market due to dollar shortages, prompting the central bank to effectively devalue it for private individuals.
Shares in Sterling Bank traded flat at 0.73 naira on Friday after falling 4 percent since the start of January. The shares shed 58.5 percent last year.
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