FirstRand on a hiring spree in Nigeria

It is a good time to be an investment banker in Nigeria. African and international banks are scrambling to strengthen their presence in a country that is forecast to overtake South Africa as the country's biggest economy by 2015.

FirstRand, South Africa's second bank, is on a mission to catch up with its rival Standard Bank and become a major player in West Africa. Its investment banking arm, Rand Merchant Bank, has just been awarded a licence by the Nigerian Central Bank, the first merchant bank licence issued in over a decade.

RMB, which has had a representative office in Lagos since 2010, is now looking to hire 50 investment bankers in Nigeria initially, with more to follow if business goes well. "We are on a recruitment drive," FirstRand chief executive Sizwe Nxasana said. "As we grow the business and do work there then we are going to be adding to those fifty."

RMB Ceo Alan Pullinger says that, "although we have already established a track record through our representative office, this licence will allow us to significantly scale up our in-country offering and hire talented bankers."

RMB will focus on corporate advisory services, equity capital markets, infrastructure, project and resource finance and fixed income services. "This move is consistent with our strategy as we often enter a new market through the appropriate operating franchise, in this case RMB, and the rest of the banking group may then follow."

The next step for FirstRand is an expansion into retail banking in Nigeria as well. The South African bank, which last year wanted to buy Sterling Bank but walked away because the price was too high, is now determined to invest "well over" $300m to buy a retail and commercial bank, possibly one of the three recently nationalised and cleaned up by the state "bad bank" after the crisis.

“One of the things that we are looking at is to still get into the retail and commercial banking space to be able to tap into deposits in the country,” Nxasana said. "At the moment we have a dollar balance sheet, but pretty soon we are going to build a naira balance sheet."

Part of the reason FirstRand was so keen to have a presence in Nigeria is so that it can link it up with its growing business in Ghana. The bank is currently finalising the acquisition of Merchant Bank Ghana for about R750m.

"Nigeria and Ghana are the two big West African countries that are attractive to be present in and after this transaction FirstRand will have a presence in both," said Adrian Cloete, equity analyst at Cadiz Asset Management in South Africa.