Kenyan bank and London fund management company win bids for Rwanda banks
Canadian Press August 4, 2004
KIGALI, Rwanda (AP) - A Kenyan bank and a London-based fund management company won bids in Rwanda's first privatization of its banking sector, the finance minister said Wednesday. Beating four other bidders, the institutions each won the right to buy 80 per cent of one of Rwanda's two main state-owned banks, a development that should help strengthen its financial sector currently crippled by a large stock of bad loans, said Donald Kaberuka.
Actis Capital LLP, acting on behalf of the British government's CDC Group (Commonwealth Development Corporation), will buy the central African nation's second- largest commercial bank, Rwanda Commercial Bank, Kaberuka told journalists. He said a small Kenyan bank, Fina Bank Ltd., will buy Continental Bank of Rwanda. The financial sector's stock of bad loans is equal to 36 per cent of all loans. They stem from the 1994 genocide during which many borrowers were killed or fled the country. An estimated 500,000 Tutsis and some moderate Hutus were killed in the 100-day slaughter. The finance minister refused to disclose the price of the banks' sale, but said the two state-owned institutions were insolvent. "Since the end of the war (genocide), these two banks have been insolvent.
In principle, we should have closed their doors but chose to keep them running" because the financial sector was still in its infancy, Kaberuka said. He said that when the sale is completed, Rwanda Commercial Bank will be valued at $6 million and Continental Bank of Kenya will be valued at $3.76 million US, from a value of zero. The Rwandan government will pay up to $11 million to re-capitalize the banks before their sale is finalized later this year, said Kaberuka.