Stories by Amaka Ifeakandu
Lagos
Financial analysts have said that the acquisition Mainstreet Bank by Skye Bank will further help the banking sector to provide the needed funds for manufacturers to boost production.
They explained that, the acquisition could significantly impact on the performance of the bank and further reconfigure the nation banking with expectations that Skye Bank, which has already been designated as one of Nigeria’s eight systemically important banks, will move on to the topmost rank of the banking industry.
Skye Bank is expected to move the ladder up in all measurable indices – size, spread, strength, resistance, profitability and returns.
Commenting on the acquisition of Mainstreet Bank by Skye Bank, Head of Research and Intelligence at BGL Plc, Mr. Femi Ademola, said the acquisition could enhance the performance of Skye Bank, noting that there are substantial values and synergies that could come in terms of spread and reach and deposit assets.
“I think the acquisition is very positive for Skye Bank Plc,” “the acquisition will improve the Skye Bank’s capital adequacy and liquidity ratios since most of the Mainstreet Bank’s assets are invested in very liquid assets. Consequently, it is expected that the acquisition will also help to boost the Skye Bank’s profitability, going forward,” he added.
Group Head, Research, Lead Capital Plc, SadiqWaziri, said the most significant gains to Skye Bank would come in terms of the expanded branch network and the resultant increase in customers, particularly savings and current account depositors, which are the cheapest form of deposits.
“Mainstreet Bank was formally Afribank, which was established in 1959; the bank is endowed with a lot of physical assets – properties in prime areas, which Skye Bank would benefit from,” he said.
Head, Trade Execution, Securities Africa Financial Limited, AkinkunmiPopoola, pointed out that the bigger branch network would enable Skye Bank to mobilize more low cost deposits and enhance its lending capacity, which will translate to improvement in loan-deposit ratio as the bank can rely more on its own deposits to grant loans to its customers.
“This is helpful at a time like this when liquidity of banks generally is threatened by the raising of Cash Reserve Requirement (CRR) on public funds by the Central Bank of Nigeria (CBN).”
“Investors and shareholders should expect to see value creation in form of capital appreciation and improved dividend because ultimately the bigger Skye Bank should be able to post decent profit going forward,” Popoola said.
Head, Research and Investment Advisory, Sterling Capital Markets, SewaWusu, said the acquisition would improve the operational performance of the bank and would create better returns to shareholders in form of enhanced dividend and capital appreciation.
