Kenya’s Equity Group Holdings has revised the deal to acquire a 66.53% stake in Banque Commerciale Du Congo (BCDC) due to the fallout from the Covid-19 pandemic.
As per the revised agreement, the lender will pay $95m instead of $105m for the stake acquisition.
Equity previously acquired a German lender ProCredit – now renamed as Equity Bank Congo – and the country’s oldest lender BCDC in the Democratic Republic of Congo (DRC).
The group plans to merge both entities to form a bank with a combined balance sheet of over $2bn.
Equity CEO James Mwangi said: “The merged entity will firmly be on the path of becoming the largest banking entity in DRC within a period of one year.”
In an emailed statement, Equity Group said that both parties have “taken into account the events that have taken place since the entry into the agreement and particularly that the Covid-19 pandemic is having adverse effects on the economies of the world and the economy of the Democratic Republic of Congo.”
Due to the ongoing pandemic, Equity Group is incurring a loss of KES120m ($1.11m) every month in fees waived for mobile banking transactions.
This move is part of the bank’s plan to minimize the use of cash in these unprecedented times. In the first quarter, the lender had increased its provisions for loan losses more than sevenfold.
Moreover, Equity’s board also suspended the 2019 dividend to set aside some cash as the pandemic hit the East African economy.
In June, British lender Atlas Mara also ended talks to acquire Equity’s banking businesses in Rwanda, Tanzania, Zambia, and Mozambique.