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Oceanic Bank of Nigeria Advances on Possible Takeover by Diamond Bank

By on July 19, 2011

Oceanic Bank International Plc (OCEANIC), a Nigerian lender rescued by the central bank in 2009, rose the most in almost nine months after Diamond Bank Plc (DIAMONDB)’s finance chief said it was in “tentative” talks to acquire Oceanic.

Oceanic jumped 6 kobo, or 5 percent, to 1.26 naira, the biggest jump on a closing basis since Oct. 29, at 3:18 p.m. in Lagos.

“It’s very early days,” Diamond Chief Financial Officer Abdulrahman Yinusa, said by phone today. “We’re not doing a cash purchase, it’s going to be a share for share combination.” ThisDay reported talks between the two lenders yesterday, citing unnamed Central Bank of Nigeria sources.

The central bank bailed out some of the nation’s 24 lenders in 2009 after loans to equity speculators contributed to 700 billion naira ($4.6 billion) of non-performing debt, according to the Economic and Financial Crimes Commission. The central bank has ordered the rescued lenders to boost capital by Sept. 30 or it will withdraw interbank guarantees.

“This news is marginally positive, given that it increases the possibility that Oceanic Bank would have found a buyer by the CBN’s Sept. 30 deadline,” Olubunmi Asaolu, head of equity research at FBN Capital Ltd., wrote in an e-mailed note today.

Intercontinental Bank Plc, Union Bank Nigeria Plc and FinBank Plc are three lenders rescued by the central bank with recapitalization deals already signed.

“Discussions are still at due diligence stage, meaning this will have to be finalized quickly before a formal acquisition bid is made,” Adesoji Solanke, a Lagos-based banking analyst at Renaissance Capital, wrote in an e-mail today. “We still have five banks up in the air, with at least three being of systemic relevance — Oceanic, Bank PHB Plc and Afribank Plc — and needing a resolution one way or another.”

Source : Bloomberg