(Bloomberg) --
Equity Group Holdings Plc will pay $95 million instead of $105 million for a 66.53% stake in Banque Commerciale Du Congo because of the fallout from the coronavirus pandemic.
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,” Nairobi-based Equity said Tuesday in an emailed statement.
Equity has two subsidiaries in the Democratic Republic of Congo having earlier acquired ProCredit, a German lender now named Equity Bank Congo. BCDC is the oldest bank in the country, having been established in 1909. Equity plans to merge the DRC's second- and fourth-largest banks to create a lender with a combined balance sheet of more than $2 billion.
“The merged entity will firmly be on the path of becoming the largest banking entity in DRC within a period of one year,” Equity Chief Executive Officer James Mwangi said in the statement.
Kenya's largest lender by market value is losing 120 million shillings ($1.11 million) a month on fees waived for mobile-banking transactions to minimize the use of cash during the pandemic. Equity boosted provisions for loan losses more than sevenfold in the first quarter and the board decided to withdraw its 2019 dividend to conserve cash as the pandemic struck East Africa's largest economy.
In June, Atlas Mara Ltd. and Equity agreed to discontinue discussions for the foreseeable future regarding the Kenyan lender's purchase of banking businesses in Rwanda, Tanzania, Zambia and Mozambique. Reasons for the decision included the need to refine its strategy due to the Covid-19 pandemic.
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