Rwandan banks safe as per now

Leading bankers and economists have said that Rwandan commercial banks are cushioned from the current global financial crisis.

Leading bankers and economists have said that Rwandan commercial banks are cushioned from the current global financial crisis.

Given the credible dealing between international banks and local commercial banks in terms of facilitating business in the country and yet there is lack of liquidity in international financial institutions, some investors have expressed concern over the impact on their fortunes.

But financial experts say that local banks are still holding strong and that with limited dealings with international banks the credit squeeze will not find its way into Rwandan banks.

“We are more than safe,” Hannington Namara Commercial Bank of Rwanda’s (BCR) head of corporate banking, downplayed the possible impact.

Adding that the only way local banks in Rwanda deal with international banks is through trade finance deals especially through money transfer services.

Many commercial banks in the country have created a variety of services for their international banking business customers as away of facilitating exports and imports.

Bankers argue that since we are not exposed to the sub-prime securities which are the main cause of the crisis and collapse of some major financial institutions in the US, the impact is negligible.

“When you look at the situation, it is mainly the investment banks which have been affected. In Rwanda we don’t have investment banks,” an expert in Development Bank of Rwanda said. 

“One investment bank affects another.” he added.

The central bank governor said that Rwanda’s capital market and exchange rates could be affected if the global market situation remained the same.

Robert Mathu, Executive Director of Capital Markets Advisory Council, says that Rwanda has no developed sock exchange and that our market is not correlated with the international markets, something which will limit the impact.

However they warn, the impact would be realized in the long run.

The monetary policy and financial stability statement of the National Bank of Rwanda show commercial banks’ consolidated assets of Frw492 billion as of June 3, 2008 against Frw467.5 billion of in December 2007, representing an increase of 5.2 per cent. Rwandan commercial banks activity has experienced a moderate increase.

Statistics from BNR show an increase in credit of 14.8 per cent from Frw279.9 billion to Frw321.2 billions.

Banks’ deposits increased by 3.9 per cent from Frw363.2 billion to Frw377.3 billion while none performing loan size reduced substantially to 14.3 per cent end December 2007 to 8.8 per cent to end June 2008.

Statistics also show that solvency of the whole banking sector system has strengthened from 15.1 per cent to 16.6 per cent.

Ends

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