The war affected the
whole banking sector. Non-performing loans represent
the main burden of the banking industry as they
represent 49.5% of banks' total portfolio. Since
it is the 1st time our readers are going to hear
about BCR, can you give a brief overview of the
steps that marked the development of BCR over the
past 8 years?
After the war, we had many problems, offices had
been vandalised and documents and money had been
stolen. We have tried to recover some property but
we have not fully recovered.
Most of the banks have been facing the same situation,
but some of them were not broken into like our bank.
That is the main difference; otherwise we share
the same problems. A number of people who had borrowed
from the bank are not in the country and even those
who come back no longer have their businesses as
they were destroyed.
The war did not only create a loss in financial
terms but also human resources. A lot of companies
closed because the management was not there anymore.
Particularly for banks, we have lost a great deal
and yet we still have the liability on the depositors'
side, some of it unlimited because we do not have
the records.
What have been your main challenges since the
war ended?
Our main challenge was to reconstruct the records,
because some of the software and backups were no
longer there. Sometimes we ask the depositor to
prove that he had funds here but it is not conclusive.
So you end up having a liability that you are not
sure of.
Out of this we have made a lot of provisions some
of them hitting the profit and loss account. We
still have those provisions; all the profits made
are taken by a further provision.
What is your current level of non-performing
loans?
It is about fifty percent of the portfolio, it is
still high. If fresh lendings could increase, then
the percentage of bad loans would diminish. For
recovering, the steps are painfully slow.
The National Bank has introduced a new banking
law and various measures relating to banking supervision
have been implemented in order to improve management
efficiency and mitigate risks in the sector. How
do you perceive those measures and their impact
on your activity?
These measures are not very new. The measures are
the same when you come from one country to another.
It is all about creating efficiency and trying to
safe guard depositors money.
We have been used to these measures although it
is hard to meet them because you still want to remain
in business. You want to lend but if it is above
a limit percentage of your portfolio you are not
allowed to lend. You still want to do business in
transportation but most of the bad loans are in
transportation so you can't go there.
We understand the banking industry is going through
a tough period of restructuring. At the same time,
drastic measures have been implemented to reduce
risks like minimum reserves and minimum capital.
These are huge constraints to the banking sector…
Sometimes we feel we are unduly over burdened, for
example if the minimum reserve could also include
foreign currency holdings that would be a relief.
We need to transact in foreign currency and yet
the stock we have are not considered as part of
the cash you have to support the overall deposits.
Also if they could give some interest on holdings
in the Central Bank.
What is the situation of your net foreign reserve
today and are you satisfied with it?
Our foreign reserve is okay; we hold good accounts
with International organisations, which fund our
offshore account. We don't have many exporters so
most of our offshore funding is through UN agencies
and other NGOs.
It seems contradictory to see that the Ministry
of Finance is pushing banks to support small businesses.
Do you believe you have the tools to provide small
and medium sized firms with the new products they
need to make their business run?
Well the contradiction is not there. It is the degree
of comfort the government can give us as bankers.
If they can provide some insurances or guarantees
covering the small-scale industries, it will encourage
us to lend to that sector. For example we feel comfortable
lending to women associations and small community
development projects because we have some guarantees
to fall back on.
For other sectors, they need to grow by themselves.
Investors need to come with expertise to do business
studies. Some investors just come and set up businesses
without doing feasibility studies and they don't
work out.
Those who try, usually have some partners from other
countries that come and help. There is the know
how, the planning is done and the success is anticipated.
Today, what is the main sector on your portfolio?
Only merchandising where at least the risk is not
so great in terms of period. We don't have any industries;
coffee and tea are the main exports. We also do
small packaging.
What about the agricultural sector?
The agricultural sector needs a lot of improvement
because we hardly have any commercial activity in
agriculture apart from tea. We finance the people
who buy from small holders although we do not have
a good history with cooperatives because of mismanagement.
|
On which services
do you believe your bank is differentiated from
the others?
I think we are better placed in foreign currency
transactions. We may have about 50% of the foreign
currency deposits in this country.
What is your average interest rate?
The interest rates are around 9-10%.
All the banks are diversifying to face competitiveness.
Where are you diversifying? Do you think there are
some products that need to be developed?
I think we are not very sophisticated in this market;
our customers want us to do what we are doing better.
For example, if you invest in information systems
so that all transactions are online, they will love
it. Otherwise we don't have many products.
The more sophisticated we get in Information Technology,
the more we attract clients. We are looking at electronic
banking and customer-activated terminals, that would
increase our portfolio.
Today, what are BCR's main areas of development?
Corporate banking or retail banking?
It is still retail in most cases. We have some big
customers like the Brewery and in the telecommunications
sector but we share them with other banks. We cannot
afford to monopolise them because maybe their facilities
and requirements may be beyond our capacity.
Most of the services for the small and medium businesses
are still the usual ones.
What is your investment strategy in terms of
upgrading your infrastructure, your services?
The more offices we have the better. For example
we are assisting in revenue collection at their
warehouses, the Airport and offices. Instead of
people coming here and then taking the proof of
payment, we have the offices there. It is not yet
linked online but that is what we want to do to
help in management and accounting.
Do you have any intention to open your capital
to foreign investors?
Yes we do, the government has a plan of divesting.
Only, they have the burden of the bad loans that
do not look good on the balance sheet. Prospective
investors may capitalise on that and offer low prices.
What will be the next step before opening capital?
The capitalisation. Fortunately, if you have the
backing of the government, collection becomes easier.
Luckily we do not have politicians on our portfolio
like other banks owned by the government, so our
loans can be collected without political backlash.
Apart form your shareholder in Belgium; do you
have any partnerships or cooperation with any financial
institutions around the world?
No, we do not. We have correspondent banks although
the monopoly was with the shareholder in Brussels.
Recently, it has become evident that you need a
bank in the US for dollar operations because there
is a time lag before you complete your transaction
if you are using a bank in Europe. We have a relationship
with Bank Of America New York and we are also going
to begin using Citibank so that we have diversity.
Do you have any deals or operations with the
Asian market?
Mainly for the importation of machinery, vehicles
and maybe the household items. It is becoming more
and more competitive than the traditional European
markets. I am not sure if freight is not more expensive
but it is becoming more competitive. On Rwandan
roads, you find more Japanese cars than anywhere
else and they are not coming from Europe.
So the market is there but for the finances it seems
they still go through Europe, Dubai and America,
as we do not have direct relationship with the Far
East.
How would you describe Rwanda as a potential
investment destination?
If the government continues to encourage development
of infrastructure, right now communication is an
emphasis. The more developed the infrastructure
is the more investors come in and they encourage
their partners back home to come and invest.
With good cooperation from the government, giving
incentives for Investment, I think Rwanda is a good
investment destination. I think the current Minister
of Finance and his team are doing a good job.
Today you are the MD of BCR. Can you give a brief
history of your professional experience and what
would be your personal challenge over the next few
months?
I studied BSc Accounting and then I started working
in a bank as a Cadet in Banking. I worked in banks
for almost 12 years although when I came to Rwanda
I worked for MTN, I had the opportunity to learn
how to run the finances of a company.
The combination of the two makes me confident that
not only am I a good banker but I am able to control
and monitor other expenses.
NB : Winne shall not be held responsible for
unedited transcriptions |
Mr.
Ephraim Turahirwa