Recently, Guaranty Trust Bank (GT Bank) reached an agreement to acquire a 70 per cent stake in Kenya’s Fina Bank Ltd for $100 million.
With a total of $338 million in assets, the bank has operations in Kenya, Rwanda and Uganda. The deal is subject to regulatory approvals in Kenya. Rao G. Balivada, managing director, Fina Rwanda, spoke to Rwanda Today’s EMMANUEL RUTAYISIRE on what the deal means for the local market. Below are excerpts.
Why are you selling?
Fina is a regional bank which is operating in Rwanda, Kenya and Uganda. Although we are a regional bank, our market share is not as big as we would like in the EAC.
To improve our market share for better services and an enhanced financial capacity to participate in credit dispensation at a higher a level, we thought that the current organic growth is not enough so, two years ago, we thought we needed strategic partners to achieve this objective.
Are you referring to the line of business because banks tend to lend to different segments of the market?
It is not about segments, but when it comes to benefits that are going to accrue to my customers, I can come to that point.
But when we did due diligence in West Africa, we found them to be professionally and technologically advanced and having a number of products and services for retail customers. It is the most profitable bank in West Africa; it runs 35 e-branches.
What gives you the guarantee that this is the right partner?
The bank’s balance sheet is almost $12 billion, and it is listed on the London Stock Exchange and Lagos Stock Exchange, which gives us comfort that governance issues are properly taken care of, otherwise you do not get listed on the two stock exchanges.
When are the regulatory approvals expected?
Approvals from the Central Bank of Nigeria are complete. We are waiting for approvals from the Central Bank of Kenya because the acquisition is happening in Fina Bank of Kenya and, once this is done, we are not going to have objections from the central banks of Uganda and Rwanda.
Should we expect staff and management changes in Rwanda?
GTB believes in management decisions made locally, so the management will be retained. The Group CEO has come through the ranks within the bank. They believe in talent development.
GTB believes in good technological applications. Once the integration is done, there will be extensive training and skills improvement.
Specifically, what does this partnership mean to Rwandans?
We are going to open more branches so that we can bring closer retail services and other products to the clients. That bank has strong specialised sectors like mining, energy and oil exploration, which are areas of focus in East Africa. We can rely on their expertise to lend to the same sectors here.
When we do international business as Fina Bank, we cannot negotiate prices to our benefit because we are small. But now that we are a big bank, we are dealing from point of strength and whatever benefits we derive from those relationships can be passed on to our customers.
How much is Fina worth?
It is not a loss-making issue. Banks are institutions which are available for alliances. It is also about good corporate governance. And when we talk about 70 per cent, it is not that the shareholders will take the money. It will be reinvested and the bank’s capital will double.
Fina Bank Kenya holds 92 per cent in Fina Bank Rwanda and the balance is held by the Government of Rwanda. Once the acquisition is done, there will be financial support to Fina Bank Rwanda, which supports our lending capacity.
What projects do you have in the pipeline that will be implemented once this partnership is concluded?
On the technology side, we shall migrate to a more versatile system, which can enable us to offer more products and services to our customers quickly and efficiently.
We will also expand our branch network in Rwanda. All staff will undergo skills upgrade. We are going to have a Visa card acquiring facility and master card print agents.