Privatisation: Barclays may takeover Kigali Bank

Buoyed by a strong capital base and many branches in the city, Banque de Kigali (BK) is confident Barclays will buy shares in the bank.

Buoyed by a strong capital base and many branches in the city, Banque de Kigali (BK) is confident Barclays will buy shares in the bank.

The Government and Barclays are negotiating and if the two parties agree, Barclays is expected to takeover (BK).

Barclays would be the fourth international bank to invenst in banking in Rwanda. Actis took-over Rwanda Commercial Bank, Fina Bank is running Bacar while Ecobank bought majority shares in BCDI. Whereas some of these banks were financially weak, BK management says their bank is strong.

"We are confident that BK’s financial status is competitive. It gives investors confidence to be part of the business," Louis Rugerinyange, assistant human resource manager of the bank said.

Barclay’s team was recently in the country, to carry out a preliminary assessment of the bank’s performance. Management says the team found the bank financially sound.

Strong financial base

BK recorded an increase of 30 per cent on its net profit from Frw2.9 billion in 2006 to Frw4 billion, last year.

This year BK targets Frw5.3 billion net profits, and the trend of net profit has grown from Frw1.7b in 2004.

The bank also reduced its expenses, registering a cost income ratio of 33:38 compared to 41:31 in 2006. This is the ratio of the bank’s costs to it earnings. The implication is that the bank’s costs reduced while its income increased.

According to BK’s income statement, the total costs reduced from Frw4.6 billion in 2006 to Frw4.3 billion in 2007

Banque de Kigali last year increased the loan disbursement especially on commerce and hotels.

The banks none performing loans mounted to 10 per cent but hoping to recover through mortgages and other securities.

Assets

BK’s total assets increased from Frw88 billion to Frw122 billion in 2006 and 2007 respectively.

This was largely driven by the new building worth Frw5 billion. It was also attributed to increase the bank’s cash and balances with the National Bank of Rwanda (BNR) and the investment in government securities.

The bank’s cash and balances with the BNR now stands at Frw15 billion from Frw9.8 billion in 2006.

Investment in government bonds increased to Frw26 billion from Frw16 billion. This reflects more than of total commercial banks’ debt to BNR. Net loans also increased from Frw37.8 billion to Frw48. 6 billion.

Competition

Barclays is said to have faced stiff competition from two other interested investors that included Standard Bank of South Africa and Bank of Baroda from India.

But sources say government would be pleased to associate with Barclays given its huge experience in global banking.

"Barclays is ranked 14th best bank worldwide and being under Barclays’ flag will be a big opportunity for our clients to access corporate services offered by the bank," said Rugerinyange.

He added that the deal is timely since Rwanda’s financial sector is remarkably registering various reforms with the current initiation of the Capital Market in the country.

This also comes at a time the Rwandan government is planning to float its shares in government ventures on the Rwanda over the counter market.

Rwanda’s minister of Finance and Economic Planning, James Musoni said that since BK is in advanced stages of privatization, Government will persuade the investors to float some shares on the Rwanda OTC market.

The government is currently in full control of Banque de Kigali after increasing its shares from 36.5 per cent to 86.5 per cent.

The deal was concluded last year after government repurchased 50 per cent shares from Belgolaise, a Belgian bank, which pulled from running the bank in 2005 and floated its shares.

About Barclays

Barclays PLC is said to be the forth largest financial services provider in the world and among the first ten commercial banks by market capitalisation.

If the deal is success full, it will mean that Bk is the third subsidiary of Barclays in East Africa after Barclays Uganda and Barclays Kenya.

Ends