| Mon 6 Jun 2005, 9:40 | | Parent puts FNB on the marriage market |
|
Parent puts FNB on the marriage market
June 6, 2005
By Sherilee Bridge-David and Bloomberg
Johannesburg - First National Bank`s parent company, FirstRand, has invited `any international bank` to talk to the group about a tie-up.
First National Bank (FNB) competes directly with Absa, which is the subject of a R33 billion takeover offer by the world`s ninth-largest bank, Barclays.
Laurie Dippenaar, the chief executive of FirstRand, said last week that the group might consider a tie-up with an international lender to ensure it remained competitive now that Barclays was entering the local retail market.
`We will consider a tie-up if it will make us a better bank and it increases shareholder value,` Dippenaar said. `It must make business sense. We have an open mind about this.`
Market speculation has suggested that FNB might be an attractive target for Standard Chartered, an international bank active in emerging markets.
Standard Chartered, like Barclays, has a strong wholesale banking base in Africa and has been looking to deepen its retail presence in these markets.
In South Africa, it has been slowly growing its retail offering.
Since buying online bank 20twenty for less than $10 million (R68 million) after parent company Saambou went into liquidation in 2002, the London- and Hong Kong-listed bank has branched out into home loans.
Standard Chartered was rumoured to have approached Absa before Barclays went public with its intentions. The international bank has, however, resisted questions about its acquisition plans.
It insisted that its consumer banking strategy, which is in an expansion phase, is to pursue organic growth in South Africa by building market share through current product offerings.
With a market capitalisation approaching that of the combined market capitalisation of the big four South African banks, Standard Chartered has 148 branches or offices in Africa.
FirstRand, like Absa, has been seeking to strengthen its reach in Africa.
Adopting an `alternative approach` to the African banking safari, FirstRand said in March that it was investing in technology companies and private equity funds in a bid to bolster its `existing skills in private equity investments and grass roots operations` on the continent.
Rather than adding branches to its network by acquiring retail banking operations, the group committed $30 million to African International Financial Holdings and bought Celpay from Celtel for an undisclosed amount.
FNB chief executive Michael Jordan said in April that exploratory talks about a potential takeover had been held with Standard Chartered, HSBC, Citigroup, and Indian and Russian banks.
FirstRand said on Friday that full-year profit would rise by as much as 30 percent. Net income in the year to June would increase by between 25 percent and 30 percent compared with the year-earlier period.
Local banks are basking in good fortune as low interest rates boost credit demand and help cut bad loan provisions.
FirstRand shares rose 3 percent to R13.75 on Friday. The banking sector rose 2.73 percent.
