It seems that Equity Bank is close to completing the Democratic Republic of the Congo commercial bank transaction. With that, it will become the largest bank in the Democratic Republic of the Congo over the next 18 months to 24 months.

More recently, the Equity Group Holdings appointed professor Isaac Macharia as the board chairman. Last month, the bank decided to stall expansion plans into Zambia, Mozambique, Tanzania and Rwanda, media reports said.

Equity Bank had also demonstrated interest in Uganda. With the deal, the bank would have fully acquired shares in BancABC of Zambia, Mozambique and Tanzania, in addition to a 62 percent stake in Banque Populaire du Rwanda.

James Mwangi, the Equity Group chief executive, told the media, “Our expansion is in two ways; horizontal and vertical. We have opted for vertical expansion where you deepen and then scale up your market share in the countries you are operating in.”

The bank had withheld approximately $89.2 million in dividend pay-out to complete the acquisition, media reports said. However, the protracted pandemic has forced the bank to pull out from acquisition plans. Q

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The reason for terminating acquisition talks is attributed to the protracted pandemic and the uncertainty that follows. This bank’s decision is in line with the board’s view, media reports said.

Equity Bank Group CEO James Mwangi, told the media, “Board of Directors have agreed to the entry into a binding term sheet through a share swap to exchange certain banking assets of Atlas Mara in four countries for shares in Equity Group.”

In January, it was reported that Equity Group’s plan to acquire four banks in Rwanda, Zambia, Mozambique and Tanzania will delay as the buyout deal was not made within the stipulated deadline. However, Equity and Atlas had planned to continue discussion further in 2020 to reach a mutual deal.

Now the pandemic has forced the bank to change its decision in acquisition plans. With that, the bank is more focused on conserving cash and liquidity to support customers during uncertain times. ”A strong capital and liquidity position gives us the strength and capacity to cushion our business, accommodate and walk with our customers during these challenging times,’’ Mwangi said.

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The Sh200 billion-kitty will benefit the private sector in fighting against the pandemic. It is reported that the loan includes a repayment period of up to three years with single digit rates. These rates are well below the market rates.

Richard Ngatia, the KNCCI President said in a statement, “The bank committed 200 billion to support chamber finance business activities, train and build the capacity of 3 million members across the country, work county chapter leadership to enable credit facilities, appraisals, support regional businesses, promote and protect jobs and enterprises.”

Mastercard, Equity Group Chief Executive Officer James Mwangi, and Equity Bank contributed a total Sh1.1 billion to the Covid-19 response kitty, media reports said.

Startups are vital to Kenya’s economic development in many ways. However, the pandemic’s impact on their growth has been quite evident. Last year, President Uhuru Kenyatta lowered the turnover tax rate from three percent to one percent for micro, small and medium enterprises.

Previously, other major organisations including Safaricom granted a 50GB data bundle to the Covid-19 Emergency Response Fund, in addition to 3,500 voice call minutes and 10,000 SMSs to 15 members of the fund. To date, Kenya has received a lot of support from banks and telcos in helping the people and businesses to combat the serious effects of the pandemic.

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Reportedly, banks in Kenya will earn higher profits compared to the banks in Nigeria due to the adoption of technology.

According to the Central Bank of Kenya, the number of bank branches came down which led to higher efficiency. Industry data from the central bank revealed that the number of branches came down from 1518 in 2017 to 1505 in 2018. This is mainly due to the deployment of mobile channels and the decision to hire third-party agents.

The report by Moody’s revealed that banks in Kenya’s cost-to-income ratios averaged 49 percent over the last four years, compared with 57 percent for Nigerian banks. Also, Kenya’s three largest rated banks have stronger cost-to-income ratios than their Nigerian counterparts, despite their higher retail overhead costs.

The banks that have been taken into consideration in the comparison report by Moody’s include KCB Bank Kenya, Equity Bank, Co-operative Bank of Kenya, Nigeria’s Access Bank, Zenith Bank and United Bank for Africa.

The banks in Kenya are also being helped by the Central Bank of Kenya’s decision to remove the interest rate cap, which was introduced in 2016.

Moody’s Analyst and the report’s co-author, Peter Mushangwe said in the report, “Over the coming quarters, we expect banks in Kenya to maintain superior profitability to their Nigerian peers, owing to higher margins, stronger cost-to-income, and lower loan-loss provisioning costs.”

He added, “Kenyan banks will continue to benefit from their higher net interest margins (NIMs) because the recent removal of interest rate caps will support loan yields. However, Nigerian banks’ cost-to-income ratios will likely improve faster as they increase their higher-margin retail exposure while containing costs as they digitalise their operations and limit branch and staff expansion.”

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Bhartesh Shah, the ex-Chief Operating Officer, has been promoted to the position of the Group’s director for digitisation, virtualisation, analytics, and artificial intelligence.

The appointment of the new COO is subject to Central Bank of Kenya’s approval.

As the new COO, Wilson will oversee Equity Bank Kenya’s operations at the group level, including the operations of its subsidiaries.

James Mwangi, Managing Director and CEO of Equity Group reportedly stated that the depth of expertise and understanding possessed by Wilson on African financial institutions will be of great help as the group takes a leading role in the African region.

There have been a few number of exits in Equity bank recently including that of Polycarp Igathe, Managing Director of Equity Bank and Jack Nigare, Managing Director for the bank’s subsidiary Finserve.

Equity bank witnessed an increase in its net profit by 9 percent to Sh12 billion as the loans given by the bank expanded by 17 percent to Sh320.9 billion.

Equity Bank’s COO Wilson is an alumni of Princeton University, United States. He graduated from Princeton with a Masters in Public Affairs and was appointed as the Manager in charge of new investments in financial institutions at World Bank’s IFC.

Wilson, who is a Swedish national, has a work experience of fourteen years in World Bank and has also spent five years with McKinsey.

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The Equity Bank will acquire stakes in four African banks: 62 percent of the share capital of Rwanda’s Banque Populaire du Rwanda and 100 percent of the share capital of African Banking Corporation of Zambia, African Banking Corporation Tanzania, and African Banking Corporation Mozambique, Reuters reports. In addition, it expects to allot approximately 252,482,300 new ordinary shares with a monetary value of Sh10.7 billion.

Equity CEO James Mwangi said, “The Board of Directors has agreed to the enter into a binding term sheet through a share swap to exchange certain banking assets of Atlas Mara in four countries for shares in Equity Group.”

Earlier this week, Equity Bank also announced its partnership with a local mobile network operator Safaricom to boost financial inclusion in the country. Through the partnership, they hope to create financial products that can simplify the transfer of funds between their agents and share technical expertise. This, in turn, could help fight various malicious activities including cyber attacks.

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