West African Banks enter Rwandan market
By Babu Emile
Experts predict an improvement in the quality of financial services and banking products that will ignite a highly competitive financial sector following the entry of West African based continental banks into the Rwandan banking arena.
On the 6th of July 2007 Ecobank officially took over ownership of Bank of Commerce, Development and Industry (BCDI) to create Ecobank Rwanda. This development follows the sell of 75 % shares of BANCOR SA. to yet another West African banking giant, Access Bank.Launching operations in 1995, Bancor SA increased its share capital from Frw 300 million to 1.5billion Rwandan francs and multiplied its loan portfolio tenfold since 2001. The bank whose strength lay corporate banking was positioned fourth in lending and collecting deposits and savings and operated four branches countrywide. Access Bank, the new owner operates over 80 branches and service outlets in Nigeria alone.
Starting out as a shining example of innovative banking, BCDI was recognized by the Banker magazine in 2004 as a ‘leader in banking innovation’. Being the only bank that offered ATM services, this was not far from truth. This year however, the banks fortunes turned sour when majority shareholder, former CEO and Board chairman of ten years Mr. Alfred Kalisa was accused and arrested on several charges that include breach of trust, use of falsified documents, favoritism and breach of laws governing commercial banks.
By the time of the sale, BCDI was burdened by losses amounting to 2.5 billion francs arising from a 46 percent non-performing portfolio, inadequate operational controls and poor corporate governance. With a network of branches in 18 countries across and over 320 branches and offices in West and Central Africa, Ecobank Rwanda brings new prospects to the country’s banking sector; her contribution of $11.6 million partly covered negative equity and recapitalized the new acquisition.
Ecobank is considered the leading independent regional bank in Africa with subsidiaries in 18 countries and a network of. Last year, Ecobank total assets were said to be amounting to $4 billion while Profit before tax (PBT) was $37.6 million and profit after tax (PAT) $24.7 million.
“Key factors impacting the results”, explained the Group Chief Financial Officer, “included growth in total deposits by 71 percent to $3 billion, about N381 billion largely resulting from the positive effect of the new retail strategy involving increased branch network”.
The Ecobank Rwanda is only one additional step in the multinational’s quest for Geographical expansion. The Group has acquired BIAT a bank in Chad (subsequently renamed as Ecobank Chad) and BICA, in Central African Republic, opened subsidiaries in Sierra Leone and Guinea Bissau and was granted license to launch operations in Sao Tome and Principe.
Sale of Rwandan banks has previously proven to bring great benefits to the sector. Bought by Actis Group, the Commercial Bank of Rwanda has already set a new standard in customer care and launched a number of new banking products to the Rwandan market and gained considerable market share.The Rwandan market should therefore brace itself for more competitive banking products and excellent service. E-Business, Gender Empowerment, Wealth Management, Portfolio Management, Concierge Services, Custodian Services and Hold Mail Services, are some products banks are yet to exploit.
Filed under: BANKING |