Standard Bank Group Ltd., Africa’s largest lender, says it’s looking at Nigeria for possible acquisition opportunities as a banking crisis in the West African country slashes valuations.

“The current situation in Nigeria does present opportunities, and we are watching developments with interest,” said Erik Larsen, spokesman for Johannesburg-based Standard Bank, in an e-mailed response to questions today. “Nigeria is a key strategic market for Standard Bank.”

Standard Bank already operates in Nigeria through its controlling stake in Stanbic IBTC.

Nigeria’s banking crisis began in August when the Central Bank of Nigeria (CBN) sacked eight chief executive officers and injected N620 billion ($4.1 billion) into those and two other distressed lenders to boost their capital and liquidity.

Banking shares extended falls this week after Intercontinental Bank Plc and Oceanic Bank International Plc reported losses. Rivals in the U.S., the U.K., South Africa and Nigeria will not be “blind” to buying opportunities in Nigeria following the losses and stock price declines, according to Razia Khan, Head of Africa Research at Standard Chartered Bank.

“The largest banks will probably still be Nigerian but, for South Africa, Nigeria offers a big prize,” Khan said. While South Africa has the appetite to do more in Africa’s second-largest economy, foreign banks, such as Citigroup Inc and Barclays Plc, will also be watching, she added.

“South African banks, in particular FirstRand, Absa and Standard Bank, have expressed a strong interest to acquire and further expand operations in Nigeria,” John Storey, an Analyst at Bank of America-Merrill Lynch, said in a note on Dec. 7. Read ChairmanKing.com’s September story titled: “Absa/Barclays Applies to Open Office in Nigeria; FirstRand and Standard Bank Keen to Enter Nigerian Banking Market”.

Absa Group Ltd.’s Deputy Chief Executive Officer, Louis von Zeuner, today said the lender is “not involved in any discussions in Nigeria” and that having a representative office in the West African country is “adequate.” FirstRand Ltd., South Africa’s second-largest banking group, did not immediately respond to questions. The lender said on Sept. 15 it’s “keen” to participate in any consolidation.

Concerns about the asset quality of Nigeria’s banks will dominate Storey’s investment view in 2010, he said. Impairment charges will not “normalize” next year, he wrote, adding that banks usually take 24 months to fully recover from a crisis.

Guaranty Trust Bank Plc (GTBank) is Storey’s top pick in Nigeria. “We see Guaranty Bank as the best-in-class bank within Nigeria that provides exposure to upside surprises to the oil and macro economic story. Zenith, United Bank for Africa (UBA), Guaranty and First Bank are the four largest banks in Nigeria by market capitalization and appear well-placed to gain market share in a consolidated sector.”

Read more on Banking in Nigeria

Standard Bank (South Africa) | Stanbic IBTC (Nigeria)

Source(s): Bloomberg News