Troubled Blue may up stake in Nigerian partner.

JOHANNESBURG - Micro financier Blue Financial Services (JSE:BFS) could possibly increase its stake in its Nigerian joint venture Blue Intercontinental Micro Finance Bank (BIMFB) if the Central Bank of the west African country liquidates or sells Intercontinental Bank, BFS and Mayibuye told Moneyweb.

BFS, which may be bailed out and taken over by private-equity group Mayibuye, owns a 55% stake in BIMFB. Its weakly capitalised Nigerian partner, Intercontinental, has a 35% interest. The venture was started in 2008.

Intercontinental is under siege from the Central Bank of Nigeria (CBN). The CBN wants Intercontinental to increase its capital or else face liquidation. Intercontinental was among nine Nigerian banks that received a $4bn rescue package. The governor of the CBN has already sounded the siren that troubled banks which fail to raise new capital will be liquidated.

"Intercontinental Bank is a shareholder in BIMFB and should the Central Bank of Nigeria decide to liquidate or sell Intercontinental Bank, it means that their shares could possibly be acquired by Blue or could transfer to the new owner," said Morne Reinders, corporate affairs executive at BFS.

BFS and Mayibuye said they were closely monitoring the situation and had not yet decided on any particular strategy and would respond appropriately when required to do so. The pair said they did not want to speculate on decisions likely to be made by the Central Bank of Nigeria with regards to Intercontinental Bank. Like any other country, the possibility of increasing the stake would be subject to approval from Nigeria's regulatory authorities.

The remainder of BIMFB is owned by American Insurance Bank (AIG). AIG is recovering after it was battered by the 2008 financial crisis. It's now majority owned by the US government.

"Johan Meiring (CEO of) Mayibuye pointed out that any change in ownership of Intercontinental Bank will only impact on the shareholding in BIue Intercontinental Micro Finance Bank (BIMFB) and not on the operation itself," Reinders said.

Intercontinental CEO was unavailable to comment on the matter.

Write to Phakamisa Ndzamela: phakamisa@moneyweb.co.za

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