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Analysis: Is First Bank’s acquisition of Heritage Bank and Polaris Bank a game changer?

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Age they say is nothing but a number but not when you are 126 and still relevant. FirstBank Ltd, Nigeria’s oldest bank has in so many ways stood the test of time.

If there is any bank you can reference for experience when it comes to transformation and innovation from the second industrial revolution to what many see now as the fourth, then it is perhaps this bank. Innovate or die as they say.

Last week, news reports suggest the bank was considering an acquisition of Polaris and Heritage Banks respectively. The bank promptly issued a press release neither affirming nor denying that a deal was under consideration.

However, it said enough to warrant a review of the consequences of taking yet another bold step in the bank’s ageless journey in survival.

Heritage Bank which began operations in 2012 after acquiring the license and structure of the old Societe Generale Bank of Nigeria is not new to controversy.

In 2014 Heritage Bank did the unthinkable, it was announced by the Assets Management Corporation of Nigeria (AMCON) as the winner of the bid for the acquisition of the defunct Enterprise Bank.

Since then, reports about the bank’s ability to remain as a going concern have dominated the news. Polaris Bank, on the other hand, was created by the CBN after it took over the hugely mismanaged Skye Bank Plc.

The bank is yet to publish its financials and the impression out there is that the bank is on life support on the instruction of the CBN.

So, why could FirstBank or indeed any bank be interested in these banks? Last January, the CEO of Heritage Bank Mr. Ifie Sekibo revealed that it will soon receive fresh capital injection from yet to be disclosed investors, a development that is expected to push up the bank’s capital base and by so doing, drive growth.

This was the first official indication that the bank needed capital to survive and remain competitive. FirstBank’s position as the largest bank by total assets and deposits was also usurped by Access Bank following its acquisition with Diamond Bank.

To wrestle the bank, it’s position at the top, First Bank will have to consider both organic and inorganic means. Thus, an acquisition with Heritage Bank is logical. Heritage Bank also recently launched its digital banking business, Octopus putting it at the forefront of the FinTech driven future of banking.

FirstBank potential acquisition with Polaris is one that is hard to decipher from a value proposition. Thus, a possible deal will have to exclude liabilities for it to make sense.

To be fair, Polaris bank has reinvented itself over the last couple of years despite its legacy challenges and ability to attract deposits. From rebranding to launching new products it has struggled to remain relevant as AMCON continues its search for a buyer.

Last year, the bad loan bank announced it will step up a sale of the bank after the 2019 general elections.

Is this a good move for First Bank? First Bank has its own fair share of challenges and is currently undergoing a transformation. The bank is reining in on its notoriously high cost to income ratio and has also reduced its non-performing loans ratio. It has also led the sector in terms of financial inclusion and is also tech conscious with its very impressive banking app and associated services.

The race to scale driven dominance in the banking sector will likely hinge heavily on inorganic growth such as mergers and acquisitions. For a Holdco like FBNH, First Bank’s parent company, the structure allows target driven acquisitions which could solidify the bank’s position as a leading financial services supermarket.

But the risks are obvious and real. An acquisition is not just a combination of balance sheets, it can be a clash of cultures and an explosion of costs. Recent banking acquisitions have not really resulted in the so-called dominance it touts or cost synergies it hopes to optimize.

Nigeria’s largest banks by profits and market capitalization remain Zenith Bank and GT Bank and both avoided mergers and acquisitions during the Soludo driven banking consolidation race.

If FirstBank is to cut a deal to swallow both Polaris and Heritage Banks respectively, then it needs thorough due diligence and must avoid carrying on liabilities and costs that often weigh down on consolidation gains.

In 2017, we got a chance to ask the CEO of the bank, Dr Adesola Adeduntan if the bank could win the race to get to trillions in gross revenue. In response, he took a deep breath and remarked that First Bank was in it to win it. This acquisition may just be a chance to nick it.

Source: Nairametrics

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Why You Should Patronize dElite Couture

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Why You Should Patronize dElite Couture

Why You Should Patronize dElite Couture

 

 

 

Arguably, one of the leading Couture in Nigeria is dElite Couture. Owned by delectable Oluwatosin Afeniforo, its a haven of fashion and more.

 

 

Why You Should Patronize dElite Couture

Known for trendy styles and quality services, celebrities and dignitaries are finding dElite as the place to be for top-notch fashion styles.

 

 

A trial is enough to convince anybody that dElite couture is the place to be where fashion is concerned.

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Naira Recovers Against Dollar, Sells At N806.73/$1

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Naira Recovers Against Dollar, Sells At N806.73/$1

 

For the second time this week, the naira appreciated significantly against the United States dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), the country’s official exchange rate window.

The naira recovered from N837.77/$1, on Monday, to N806.73/$1, on Tuesday, after it slumped to N927.19/$1 on Friday, December 1, 2023 at the official market.

According to Data from FMDQ Securities Exchange, a platform that oversees foreign exchange (FX) trading in Nigeria, the rate recovered from the N830.90/$1 it opened on Tuesday to close N806.73/$1, thereby, gaining by N24.

The recovery was against the report of the National Bureau of Statistics ‘Foreign Trade in Goods Statistics (Q3 2023),’ report that Nigeria’s foreign trade in the third quarter of 2023 rose by 53.16 per cent year-on-year to N 18.80tn.

According to the report, crude oil revenue surged by 83.23 per cent to N8.54tn in the quarter under review. In the third quarter of 2022, total crude oil sales amounted to N4.66tn.

Buoyed by an increase in trade activities in the period, total exports increased by 60.78 per cent to N10.35tn.

The report, released on Monday, read in part, “Nigeria’s total merchandise trade stood at N18.80tn in Q3, 2023. The value indicates an increase of 54.62 per cent over the amount recorded in Q2, 2023 as well as by 53.16 per cent when compared to the value recorded in Q3 2022.

“Total exports accounted for 55.02 per cent of total trade in the reviewed quarter with a value of N10.35tn, showing an increase of 60.78 per cent and 74.36 per cent over the value recorded in the preceding and corresponding quarters respectively.

“Exports trade in the third quarter of 2023 was dominated by crude oil exports valued at N8,535.61 billion representing 82.50 per cent of total exports while the value of non-crude oil exports stood at N1.81tn accounting for 17.50 per cent of total exports; of which non-oil products contributed N677.57bn or 6.55 per cent of total exports.

“On the other hand, the share of total imports accounted for 44.98 per cent of total trade in the third quarter of 2023 with the value of imports amounting to N8.46tn in Q3, 2023. This value indicates an increase of 47.70 per cent and 33.33 per cent respectively over the value (N5.73tn) and (N6.34tn) recorded in the preceding and the corresponding quarters of 2022.”

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Lagos Task Force dislodges Ikorodu roadside traders

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Lagos Task Force dislodges Ikorodu roadside traders

Lagos Task Force dislodges Ikorodu roadside traders

 

 

In its continuous efforts to rid the state of the menace of street trading, operatives of the Lagos Environmental Sanitation Corps and the Kick Against Indiscipline, on Tuesday, dislodged roadside traders around Aunty Kenny in the Agric area of Ikorodu.

 

 

 

Lagos Task Force dislodges Ikorodu roadside traders

 

 

 

A statement by the Lagos State Ministry of the Environment and Water Resources said the dislodgement was part of measures to sustain zero tolerance for street trading in the state.

 

 

 

 

 

 

 

It read, “Operatives from the LAGESC/KAI on Tuesday dislodged recalcitrant street traders on the kerb at Aunty Kenny Agric on lkorodu Road as part of measures to sustain the zero tolerance for street trading.”

 

 

 

 

Similar enforcements were carried out on Monday at Oshodi-Mushin Road, Ojuelegba Road, Yaba-Muritala Muhammed Way, Oyingbo under the newly constructed bridge, inner and outer Marina-CMS, Victoria lsland and Lekki areas of the state, following directives of the Commissioner in the ministry, Tokunbo Wahab.

 

 

 

 

 

 

 

According to a statement, many of the defaulters were arrested in the course of enforcement and taken to the LAGESC/KAI headquarters where they were handed over to the appropriate section for interrogation and prosecution.

 

 

 

 

 

 

The commissioner also gave directives to operatives of LAGESC/KAI and other related agencies to sustain the dislodgment and ensure that the traders do not return to the areas

 

 

@Punchng

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