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Suspense over Crane Bank’s expansion

Friday September 07 2012
cranebank

A Crane Bank branch in Uganda. The bank could be expanding into Rwanda. Photo/File

Two weeks ago, it was reported in the Daily Monitor, one of Uganda’s newspapers, that talks between the National Bank of Rwanda and Crane Bank management were at an advanced stage over the commercial institution’s plans to expand into Rwanda before the year end.

However, in an interview with Claver Gatete, the Governor of the National Bank of Rwanda, the central bank boss said he could not reveal anything about the talks as it was a confidential matter between the regulator and investor.

“If there is any tangible development regarding investors in the banking sector, we issue a communication. Until we do, we cannot say that Crane Bank is investing in Rwanda,” said Mr Gatete.

Last week, Crane Bank announced plans to venture into the Democratic Republic of Congo, Rwanda and South Sudan this year to tap into the growing revenue from Uganda’s increased trade with its neighbours.

Crane Bank managing director A R Kalan said the institution has already received a licence to set up shop in DRC and is in the advanced stages of securing one for Rwanda.

If Crane Bank goes ahead to invest in the country, it will be the third regional financial institution to expand into the Rwandan market following Kenya Commercial Bank and Equity Bank from Kenya.

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I&M bank, another Kenyan bank, is part of a consortium that has acquired an 80 per cent stake in Banque Commercial du Rwanda (BCR).

“We shall speak when the actual investment takes place but as of now, only Crane Bank can say when and whether they are coming to Rwanda,” said Monique Nsazabaganwa, vice governor of NBR.

Mr Kalan told the Daily Monitor that since physical branch networks are an important component of the bank’s distribution channel mix, the institution will grow its footprint to 25 branches before the end of this year.

Currently, the bank has expanded its branch network in Uganda to 21 from 18.

Despite the challenging economic environment that Uganda witnessed in the second half of 2011, Crane Bank was among banks that registered impressive profits.

Crane Bank’s net profit was reported to have grown by 29.4 per cent from Ush51.59 billion ($20m) in 2010 to Ush66.76 billion ($26m) in 2011, while its loan book grew to Ush524.66 billion ($208m) from Ush410.18 billion ($163m) over the same period.

Experts are rooting for more commercial banks to join the Rwandan market as this will boost the investment made by the private sector.

“More banks mean that clients will have a wider range of options to access banking services such as loans at cheaper interest rates,” said Eric Rutabana, chief investment officer at Business Partners International Rwanda Ltd.

Central bank figures indicate that the average lending rate for commercial banks slipped to 16.72 per cent from 16.87 per cent in May.

The average deposit interest rate was reported at 8.2 per cent in March, 8.1 per cent in April and up to 9.9 per cent in May.