Kenyan Expresses Interest in Buying Troubled Congo Lender

NAIROBI, Kenya, Capital Markets in Africa: Commercial Bank of Africa Limited, Kenya’s largest closely held lender, expressed an interest in buying struggling Democratic Republic Congo lender Banque Internationale Pour l’Afrique au Congo.

Commercial Bank of Africa sent a letter that was signed by the Nairobi-based company’s Group Managing Director Isaac Awuondo and dated June 30 to Congo’s central bank saying it was interested in expanding its footprint into the country by investing in the recapitalization of BIAC, according to a copy of the letter obtained by Bloomberg News. Awuondo confirmed that CBA had expressed “initial” interest in an investment in BIAC and declined to comment further when contacted by phone on Monday.

As much as $100 million would need to be invested in order to sufficiently recapitalize the bank, said a person familiar with the matter and who asked not to be identified because the talks are confidential.

Congolese central bank spokesman, Plant Kibadi, said the regulator had received various expressions of interest and will make a decision once it had studied the “credibility of each offer and the funds each investor is prepared to make available.”

Banking Penetration
Regulators placed BIAC under statutory management on May 30 after the cancellation of central bank credit lines in February caused a run on the bank, forcing it to stop depositor withdrawals and close branches. Congo’s Prime Minister Augustin Matata Ponyo ordered the central bank last week to halt certain loans to BIAC because they’re contributing to weakening the nation’s currency by opening the way to some account holders to withdraw deposits not backed by collateral.

CBA, which has gained market share in Kenya and Tanzania by starting mobile-phone banking services and also has operations in Uganda, sees Congo as a key strategic market, the company said in the letter. The lender would use the same strategy in Congo, where about 18 percent of the adult population had a bank account in 2014, compared with a 34 percent average in sub-Saharan Africa, according to the World Bank. At least 9 percent of Congolese people had a mobile account, while less than 4 percent had a debit card, the study showed.

The lender had total assets of 216 billion Kenyan shillings ($2.1 billion) at the end of 2015, including cash of 5.3 billion shillings, according to its website. CBA, whose Deputy Chairman Muhoho Kenyatta is the brother of Kenya’s president, ranks as Kenya’s seventh biggest by assets.

Source: Bloomberg Business News