The acquisition of BPR Atlas Mara by Equity Bank and merger of the two lenders will be completed before the end of this year, as the two parties work to finalise the deal.
Equity Bank Group recently announced that it is seeking to acquire 62 per cent shares in BPR Atlas Mara.
“We are still carrying out due diligence, the expectation is that it will be concluded before the month ends and the shareholders will have concluded on the details of the deal” said Maurice Toroitich, the managing director of BPR Atlas Mara and the chairman of Rwanda Bankers Association.
He added that there is good progress by both parties and that the deal will be a win-win for both parties involved.
“The merger is forward looking, it is two entities merging to grow together,” said Mr Toroitich.
The BPR Atlas Mara shares that belong to the public, which have been of concern even in previous acquisitions, will remain intact and will be transferred into the new structure.
Meanwhile the market is gearing up for price wars as competition heightens. This is expected due to the changes in the country’s financial market, which includes consolidations and capital injections.
Most banks in Rwanda registered impressive numbers in terms of profitability in the first quarter of 2019, for instance Bank of Kigali registered a Rwf7.5 billion profits; Equity Bank Rwf1,924,729 billion, KCB Rwf498,304 million; Ecobank Rwf438,527 million, Cogebanque Rwf979,761 million, while I & M registered Rwf1,496,212 billion worth of profits in the first quarter.
“The country’s financial sector is healthy, the capital adequacy ratio is sound, the level of interbank trading is good and assets are growing,” said Mr Toroitich.
He said this shouldn’t be a surprise because the country’s economy is also good at the moment.
“The banking sector is a derivative of the economy, when the economy is doing well the banking sector will also do well,” Mr Toroitich said.
The other key drivers of the growth in the banking sector is increased efficiencies due to the use of technology, which has lowered operational costs, increased lending to key sectors of the economy like agriculture, infrastructure among other sectors.
Although the banking sector remains largely sound, the recent central bank requirement for commercial banks to increase their core capital by 300 per cent, from Rwf5 billion to Rwf20 billion has proved to be an uphill task for many banks.
Lenders are bracing for the increased competition and many are going back to the drawing board to come up with better customer-friendly products.
BPR Atlas Mara adjusted its base-lending rate from 16.5 per cent to 14.5 per cent, and has also scrapped a monthly fee on current accounts, while many other banks offer customers access to their money through mobile money wallets and cheaper transactions.
“We are anticipating price wars, but we are well prepared. It is definitely going to drive our prices lower and we have a strategy that will help us consolidate our positioning in the market and grow it,” said Diane Karusisi, the CEO of Bank of Kigali, adding that the bank is tapping into new segments of the economy like agriculture, which has been largely underbanked.
“We are diversifying the sectors we finance and working with corporates, but also SME players in the value chain. We are financing a cement plant, Mara phones among others” she added.
She said Bank of Kigali is focusing on boosting customer experience.