International Expansion

Outside of Africa, FirstBank has been a pioneer in international expansion, establishing a UK branch in the 1980s and subsequently a fully fledged FSA-regulated bank in the UK (FBN Bank UK Limited) which is now the largest subsidiary of any Nigerian bank in the UK, with over GBP 1 billion on its balance sheet, and a branch in France. FBN Bank UK focuses on corporate banking and wealth management for high networth African clientele while also offering correspondent banking services to other African banks via its London and Paris locations. FirstBank also operates a representative office in South Africa (Johannesburg) and was similarly a pioneer in China – launching a Beijing office, which was the first China Banking Regulatory Commission-licensed representative office of any Nigerian bank. FirstBank has applied, and is expecting approval, for a representative office licence in the United Arab Emirates. Representative offices play an integral role in facilitating trade finance and international investment and financing transactions, and FirstBank has chosen to team up with Nigeria's largest bilateral trading partners and to 'follow our customers' to locations that are strategic to Nigerian and African trade and investment flows.

To date, FirstBank has been relatively conservative and circumspect on the African continent, opting to focus on strengthening its dominant domestic Nigerian position. Having consolidated its position as the Nigerian market leader and with a significant amount of free capital on its balance sheet, FirstBank now intends to consciously expand its banking franchise into selective African markets in the coming years.

Several basic principles govern FirstBank's geographic expansion strategy:

1. International expansion is generally desirable – smoothes earnings, enables future growth options (resulting in potential share price premium), allows the Bank to take advantage of international arbitrage opportunities, where they exist, and to better capitalise upon its existing capabilities and assets.
2. International expansion is a long-term mission – and will require near-term capital outlays for longer-term benefits.
3. Not all countries are created equal – wealth is disproportionately concentrated in a few nations with little correlation to their geographic size; for many smaller nations, economically, the marginal income is better spent domestically; several non-wealth factors are also crucial.
4. Expansion must be underpinned by a solid business case – economics and not ego must drive international expansion and, where acquisitions are made, they must be undertaken at a reasonable valuation such that all actions create shareholder value.

It is appropriate to emphasise that while FirstBank intends to expand internationally within SSA, international expansion will not be the focus for 2010.