Keystone Bank Limited, one of the three nationlised banks belonging to the Asset Management Corporation of Nigeria, has sold its Ugandan subsidiary due to lack of capital to run it.

A statement by the bank on Sunday said the Ugandan unit, Orient Bank Limited, had been acquired by the erstwhile minority shareholders as part of a consortium led by 8Miles LLP, an Africa-focused private equity fund.

The statement by the Head, Brand and Communications, Keystone Bank, Omobolanle Osotule, noted that the lender owned 80 per cent stake in the Ugandan unit before the sale of its shares.

Osotule said Keystone Bank had obtained the Central Bank of Nigeria’s approval to conclude the divestment in order to focus on its growing share in the domestic market.

The spokesperson said Vetiva Capital Okagbue and Ikoli law firm were the transactions advisors and solicitors respectively.

The Managing Director and Chief Executive Officer, Keystone Bank, Mr. Philip Ikeazor, had hinted on the planned divestment from African subsidiaries last year while fielding questions from journalists at a press briefing.

He said the lender was planning to divest its businesses in Uganda, Sierra Leone and Liberia because of issues bordering on capitlisation, among others.

Ikeazor said, “The core bank itself has currently returned back to profit, but as known, we have African subsidiaries which we had not had capital to run prior to when we took over the institution.

“Those subsidiaries on their own have had several challenges, including capitalisation issues. And while the parent company itself is required to recapitalise, we didn’t have capital to put in our subsidiaries, so clearly, the subsidiaries were not performing well; but the strategy is to divest.”

He said the bank could only strive in other countries if it had the capital and financial muscle to do so.

“We are still operating in Uganda, Sierra-Leone Liberia and we are in the process of divesting in those locations, which we are at advanced stages for most of them,” he said.

“Basically the poor performances in those countries cannot be supported in our head office so there is no need holding onto them,” he added.

The Central Bank of Nigeria had in 2009 fired the CEOs of eight of the country’s lenders and bailed them out with N620bn after a debt crisis caused by loans to stock speculators and fuel importers threatened the industry.

Following this, the Federal Government through the Asset Management Corporation of Nigeria set up Keystone Bank Limited, Mainstreet Bank Limited, and Enterprise Bank Limited as bridge banks to take over three of the banks which lacked capacity to recapitalise.

Last year, AMCON sold Enterprise Bank and Mainstreet Bank to Heritage Bank Limited and Skye Bank Plc, respectively. It said Keystone Bank would be sold after the general elections.

Punch