Bank owners demand dividends

Local shareholders of BPR Atlas Mara are up in arms over lack of dividends for seven years, setting stage for confrontation with majority investors.

Atlas Mara, a sub-Saharan financial services group, acquired Banque Populaire du Rwanda (BPR) seven years ago, and was expected to invest about Rwf15 billion to become the majority shareholder with 62 per cent stake.

However, the bank’s management said the shareholders’ demands for dividends are unrealistic because the lender has not made profits for the period cited.

Maurice Toroitich, chief executive of BPR Atlas Mara, said the bank experienced turbulent business environment since 2012 that could not allow it to pay dividends.

 The bank has been making losses for a while which put its capital below minimum statutory requirements hence the need to look for more investors to be able to raise the capital,” said Mr Toroitich.

“Giving dividends today means making it worse for the bank to survive. We had hopped that in two to three years the bank will be in a position to discuss offering dividends,” said Mr Toroitich.

According to Mr Toroitich, the bank made Rwf908,800 million profits in 2014 after making a loss of Rwf5,582,622 billion in the previous two years.

The profits made, he said, was little to offer dividends to the shareholders.

“Every annual general meeting the information on the performance of the bank is shared with the board members who also inform the shareholders.

Unless they are not informed but we wouldn’t expect them to complain,” he said But the 158,776 local shareholders of said the bank has been releasing scantly information to them on its financial status.

“Every time we meet in the annual general meeting we are only told about losses by the bank and for the past seven years, no single profit has been registered,” said Romuald Mukwiye, chairperson of BPR Atlas Mara local shareholder’s committee.

“We do not understand how a stable and well established bank like BPR Atlas Mara makes losses of billions for six years consecutively said Mr Mukwiye, adding.”

“We do not believe their calculations because they denied us to have a representative in the administration team of the bank yet we requested it for many times.

There is something behind denying us access to first hand information on our bank,” said Mr Mukwiye.

Atlas Mara Ltd, the parent company of BPR-Atlas Mara announced recently that it had proposed share exchange transaction with Equity Group Holdings for its banks in Rwanda, Zambia, Mozambique and Tanzania.

According to Atlas Mara management, the transaction will result in increased scale in two of the four markets Rwanda and Tanzania  as a result of incountry mergers with Equity Group’s local banks.

“We expect these four banks will generate improved financial performance. The Board believes this transaction is in the best interests of Atlas Mara’s shareholders and will enable us to maximise value from these assets.

Upon conclusion of the transaction, Atlas Mara will be better positioned to deliver shareholder value,” Michael Wilkerson Atlas Mara Ltd chairman is quoted in the company’s 2018 Annual Financial report.

Though Atlas Mara had anticipated to close the deal in 2019, negotiations with Equity Bank Group Ltd appear to have stalled.

In January, Equity Group Kenya, issued a notice informing shareholders that the binding agreement for the proposed $107 million share swap deal with Atlas Mara Ltd has collapsed.

“Equity Group Holdings here by confirms that, as of the date of this announcement, the parties have yet to sign detailed transaction agreements and the Binding Term Sheet has expired,” James Mwangi, Equity CEO, said in the notice without giving details.

According to the local shareholder’s committee, it has been almost eight years without earning dividends.

“Every time we meet in the annual general meeting we are only told about losses by the bank and for the past seven years, no single profit has been registered,” said Romuald Mukwiye, chairperson of BPR Atlas Mara local shareholder’s committee.