TOP STORY:Rwandan banks safe from global financial crunch

GLOBAL FINANCIAL CRISIS: Though players warned that there is no guarantee that the situation will remain the same, they said credit facilities are still readily available as long as somebody has sufficient collateral.As the global financial crisis takes its toll on African economies, Rwandan banks are yet to feel the impact of the crisis, a non conclusive mini-survey done by the Business Times reveals. According to a select number of the top banking executives talked to during the survey, the industry is still relatively stable and it business as usual. Steve Caley, the Director General of FINA Bank observed that generally the Rwandan economy has not yet been affected by the crisis because of “reasonable” regulation by the regulator, the Central Bank. “We are still prepared to lend to the people who bring proposals to us that we consider worth supporting. Generally we want to lend for investment and not for consumption. Though this means we have had a less market share, we are probably slightly better protected,” Caley said. “This is also the time when the banks need to be more understanding to try and help customers through difficult periods other than to be strict and ending up creating a crisis that you actually want to avoid. This calls for flexibility and understanding while at the same time being cautious as ever and being strict where necessary,” he added. Though the world economic outlook is still uncertain and subject to instability, there is already a general consensus among banking executives that some players may be slightly more strict and stringent in times like this. Banking executives say that there is need for to be more understanding and help their clientele. The prevailing crisis with its roots in the United States represents a major shake-up in the way global business is conducted. No sector has been spared from the turmoil, which has already caused a substantial slowdown even in less developed countries. In developed economies stock markets are reportedly down more than 40 per cent from their recent highs. Investment banks have collapsed, rescue packages have been drawn up involving more than a trillion US dollars, and interest rates have been cut around the world. Vivian Kayitesi, the Marketing Manager, Commercial Bank of Rwanda (BCR) reaffirmed that her financial institution is yet to feel the spills of the crunch. According to her, “We have not been affected so far though we are not sure it will come in future. Credit facilities are still readily available as long as somebody has sufficient collateral. Business is normal and we are still doing our usual credit check.” “As a bank we do not just lend. If you ask for a loan we also consider your ability to pay. Every product is tailored to meet the needs of the customer,” she added. In a separate interview, a top banking official at the newly established Kenya Commercial Bank (KCB) who talked on conditions of anonymity, said that KCB has not yet felt the pinch of the economic crisis though the bank is on alert. KCB operates in the whole of the East African region including, Juba a city of Southern Sudan. At the recently held African Union (AU) Summit in Addis Ababa, Ethiopia, the International Monetary Fund (IMF) urged African countries to monitor banking balance sheets and act promptly as a way of mitigating the effects of the crisis. In his keynote address to the summit, Takatoshi Kato ,the Deputy Director of IMF urged governments to identify banking system vulnerabilities and plan how they will react should a banking crisis erupt, recognising that the resources to support their financial systems may be limited. “The global financial crisis will not spare Africa. Weaker financial linkages with the rest of the world may have limited the impact of the systemic banking sector crisis in advanced economies on Africa, but the continent will be hard hit by the effects of the ensuing slowdown in global economic growth,” he said. “The liquidity and usability of reserve assets, the status of non-performing loans in the banking sector and the availability of trade credit deserve particular attention,” he added. The IMF will next month host a conference in Tanzania with a priority of discussing how to manage the effects of financial crisis. The meeting will converge the region’s finance ministers, policy makers, the civil society and the private sector. Ends