Diamond Bank set to buy European bank
Nigeria’s Diamond Bank is in talks to buy a niche European bank to tap into direct investment and trade flows from Europe into Nigeria, its chief executive, Alex Otti said on Tuesday according to Reuters.
Alex Otti also told an investor conference call that the bank expects to make an 18 percent return on equity in 2012 and a pretax profit of up to 30 billion naira ($190 mln), compared with a loss of 16.26 billion naira last year.
He said Diamond had received an approval in principle from Nigeria’s central bank for the acquisition and that it would not need to raise additional capital to complete the deal.
“We are not looking at buying a high street bank. It’s going to be a specialized bank that will complement our services,” he said. He did not disclose the name of the bank.
“We have a lot of business flows in that direction (Europe) and we use third parties to do those … we strongly believe that if we are successful it will add value to the bank,” Otti said.
Otti said Diamond had raised $170 million in debt this year, and was on track to boosting its total debt issued in 2012 to $500 million, including issuing a planned debut Eurobond at the end of the year, to boost capital adequacy to 17 percent.
Around $70 million of the capital already raised had come from the World Bank’s private sector arm, the International Finance Corporation, he said.
The mid-tier lender last week posted a pretax profit in the first nine months of the year to 23.2 billion naira ($148 mln), pushing its shares up 20 percent in two days, compared with a 6.9 billion naira loss in the same period last year.
Its share price has gained 125 percent so far this year.
“We have had to move (our operating profit) target to 55-60 billion naira by year-end. We believe we should be ending the year anywhere between 25 to 30 billion naira pretax profit,” Otti said.
Diamond Bank is aggressively seeking to grow its operations to be able to tap into infrastructure and consumer growth in Africa’s most populous nation. It planned to build extra 130 branches in two years time, to add to its existing 220, he said.