Equity group holdings has discontinued discussions on the proposed acquisition of banking businesses from Atlas Mara (ATMA).
The bank had expressed the intention to acquire banking businesses from ATMA in Rwanda, Tanzania, Zambia and Mozambique.
According to the bank’s officials, the decision is consistent with the Board’s view of uncertainty of risk which precipitated the proposed withdrawal of Kshs 9.5 billion dividend pay-out to shareholders.
In January 2020, the Board announced the extension of discussions with ATMA following the expiry of the transaction period before the two parties could sign a detailed transaction agreement.
During the extended period, the two parties would continue further discussions to try and reach mutually acceptable commercial terms with respect to the proposed transaction or a variant of it.
“After careful consideration, EGH and ATMA have mutually agreed to discontinue discussions on the transaction for the foreseeable future, ” said Dr. James Mwangi, managing director and CEO equity group holdings.
Dr Mwangi noted that the Board has considered the events that have taken place since January when the two parties agreed to extend transaction discussions and particularly the impact of the COVID-19 pandemic to the world and the economies in which EGH operates.
The Board’s decision, Dr Mwangi said is in line with its Business Continuity Management that speaks to risk assessment, approach to prudent risk mitigation and management in the prevailing economic slowdown occasioned by the COVID-19 pandemic in the region and globally.
“The Board’s Business Continuity Management is focused on conserving cash and liquidity and deploying it to support our customers to survive during this economic crisis and to recover and thrive post the crisis,” said Dr Mwangi.
The CEO noted that a strong capital and liquidity position gives the bank the strength and capacity to cushion its business, accommodate and walk with their customers during these challenging times.
We have deployed a defensive and offensive mechanism through loan accommodations and rescheduling and of up to 25 percent of the total loan book for periods of up to 36 months.
“This will enable our customers to go through the prevailing turbulence, while at the same time preserving cash to shore up the financial revival and growth of their businesses post the COVID-19 crisis.”
On the offensive approach the Group is focused on accelerating the push to digital channels and growing the various non-funded income franchises while re-evaluating the acquisition of new businesses where significant capital injection and managerial attention is required.
“The Group is committed to its strategic objective of expanding its footprint in Africa to provide access to competitive, tailored financial services to improve people’s lives and livelihoods whilst also delivering significant value to its stakeholders,” said Dr Mwangi.
He added that at the same time, the Group continues with its vision of building sub-Saharan Africa’s premier financial institution through delivering innovative products and services to customers including in particular the effective use of technology self-service banking.