Standard Bank Of South Africa Resolves Nigeria Problem By Buying Minority Stake In Oceanic

Oceanic Bank, the fifth largest bank in Nigeria, will acquire Stanbic Bank Nigeria, and Standard Bank will acquire a minority shareholding in Oceanic Bank, according to a memorandum of understanding recently concluded by Standard Bank
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Oceanic Bank, the fifth largest bank in Nigeria, will acquire Stanbic Bank Nigeria, and Standard Bank will acquire a minority shareholding in Oceanic Bank, according to a memorandum of understanding recently concluded by Standard Bank.

Earlier this year, the Central Bank of Nigeria imposed a minimum capital requirement of Naira 25 billion on all banks operating in the country. Banks were given until December 31, 2005 to comply with the new ruling, which raised the threshold from Naira 1 billion as part of a larger strategy to force consolidation among the 89 banks active in the country. The Nigerian government believes a smaller number of larger banks will be more prepared to lend to the private sector, rather than sticking to government bonds.

According the bank, it has been exploring the possibility of merging or selling its Nigerian banking arm from the outset. But, concerning its custody operations in the interim, Standard Bank looked to set up a non-banking trust operation that would secure regulatory approval not only in Nigeria but from the Securities and Exchange Commission (SEC) in the United States and the Financial Services Authority (FSA) in London as well.

While Standard Bank maintains that it is aiming to conclude the transaction with Oceanic Bank by the December 31, it has acknowledged that-due to a number of internal and external dependencies-there is no certainty that it will make the regulatory deadline. If the transaction is not concluded successfully, Standard Bank reports that it intends to continue to develop the trust company solution.

Standard Bank, via its subsidiary Stanbic Bank Nigeria, is currently the only custody provider for global custodians and cross border investors active in the Nigerian market.

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