BoB rejects Russian bank licence application
Brian Benza | Friday May 29, 2015 18:04
Although the central bank could not divulge reasons for the rejection, BoB Head of Communications Andrew Sesinyi told BusinessWeek that the central bank last year granted a conditional approval to Alnivor Botswana trading as Russian African Bank, but the application was rejected upon further vetting this year.
“The application for a banking licence in respect of Alnivor Botswana (Pty) Ltd, trading as Russian African Bank, was unsuccessful and that the conditional approval was hence revoked,” he said.
Market sources told BusinessWeek that after the conditional approval was revoked, officials of the Russian African Bank appealed the decision to the ministry of finance, where the minister Kenneth Matambo upheld the central bank’s determination.
According to the central bank’s 2014 annual report released this week, which was printed before the provisional approval was revoked, four licence applications for commercial banking businesses were received during the year. “One applicant was granted conditional approval, two were not successful, while the other application was deferred. “Two commercial banks voluntarily surrendered their banking licences during the year, thus reducing the total number of licenced commercial banks to 11 as at December 31, 2014,” stated the annual report.
Local organisations that have previously expressed interest to enter the commercial banking industry include Letshego, Unigem, Botswana Building Society (BBS), Botswana Savings Bank (BSB) and National Development (NDB). Since 2007, Bank Gaborone from Namibia, Capital Bank from Malawi, BancABC and ABM Amro have set up commercial banking businesses in Botswana despite the country’s small market size.
Two other foreign banks, Bank of India and State Bank of India opened shop in Botswana in 2013.
Giving an update on the banking operations in 2014, the central bank said the sector remained safe, sound and stable, with adequate capital levels and profitability indicators. “However, there were signs of short-term liquidity stress across the sector in the latter half of the year, as well as a marginal decline in asset quality during the year,” stated the bank.
The short-term liquidity stress saw the Liquid Asset Ratios (LAR) of the banking industry declining from a range of between 12-36 percent in 2013 to between 10.5-19.6 percent in 2014. This means the most liquid bank in the country last year had an average LAR of 19.6 percent.
The Banking Act prescribes that commercial banks are required to keep at least ten percent of the assets in cash or near cash local instruments to meet short-term depositor obligations.