Equity Bank is set to become the second largest bank in Rwanda, based on its intention to acquire Cogebanque, with Equity Holdings CEO James Mwangi seeing growth opportunity in the unpenetrated financial services sector.
Equity Bank is set to become the second largest bank in Rwanda, based on its intention to acquire Compagnie Générale de Banque (Cogebanque).
The acquisition, valued at $48.1 million for a 91.93 percent controlling equity stake, and subsequent amalgamation will result in Equity Bank having a total combined assets market share of 18 percent and a deposits market share of 19 percent based on audited accounts as at 31st December 2022.
The purchase is in line with Equity Group Holdings regional expansion strategy. The group’s current portfolio in Africa includes Equity Bank Kenya and EquityBCDC in the Democratic Republic of Congo, both of which have the second largest market share in their respective markets.
According to James Mwangi, group managing director and CEO of Equity Group Holdings, Rwanda’s five-year average GDP growth rate at 6.5 percent ranks it amongst the 10 fastest growing countries in the world.
“Rwanda’s economic growth is expected to be supported by a continued ease of doing business, recovery of global travel that will underpin its tourism and meetings, incentives, conferences and exhibitions strategy targeting foreign direct investments, regional integration, supporting trade and increasing contribution to its manufacturing sector,” he said.
James added, “An underpenetrated financial services sector, with private sector credit and GDP being below 30 percent provides a well-defined secular growth opportunity for the financial services group.”
Uzziel Ndagijimana, Rwanda’s minister of Finance and Economic Planning, noted, “The consolidation of these two institutions will undoubtedly contribute to the growth and stability of Rwanda’s banking sector, enabling us to provide better financial services to our citizens and facilitate economic empowerment.”
At the end of 2022, Cogebanque reported net assets of RWF 47.35 billion and profit after tax of RWF 9.06 billion, from its 28 branches, about 600 active bank agents and 36 automated teller machines (ATMs).
This will complement Equity Bank Rwanda’s network of 18 branches, 3,666 agents, 22 ATMs and 1,384 merchants (as at end-2022), which serves 978,000 customers. Net assets are reported at RWF 66.24 billion, and profit after tax of RWF 24.22 billion.
The acquisition and amalgamation of Cogebanque will help shore and transform Equity Rwanda’s economies of scale with the resulting 54 percent growth in balance sheet, positioning it to play a more meaningful role across the economy and the region in line with Equity Group’s Africa Recovery and Resilience Plan (ARRP), according to a recent statement from the Group.
Through combining Cogebanque’s existing network of 28 branches with that of Equity Rwanda, the combined bank will achieve countrywide distribution and coverage while acquiring and strengthening its Micro-, Small- and Medium-sized Enterprise (MSME) franchise.
“This acquisition and proposed amalgamation of Cogebanque with Equity Bank Rwanda will result in a strengthened national and regional commercial bank in line with, and underpinning Rwanda’s aspirations of being an international financial and business centre,” James explained.