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Atlas Mara, Equity Group Holdings merger

NOT too long ago, Atlas Mara entered the Zambian market with the acquisition of Finance Bank and eventual integration of BancABC.
Under normal circumstances, it would have been ideal for the newly-formed bank to fully settle and build on the gains it attained since coming on the Zambian scene.
The first message being sent by this pending acquisition is that the Zambian market and other countries where they are disposing their interest are so competitive and perhaps Atlas Mara has failed to remain competitive.
Copperbelt University lecturer in entrepreneurship and marketing Moffat Chawala says the other message could be that this is entirely a business decision which is attractive to both Atlas Mara and Equity Group Holdings, who are trying to expand their footprint in Africa.
“The reaction of clients is always mixed and clients are always sceptical when issues of acquisition are at play,” Mr Chawala says.
He cited the issue of Barclays Bank and ABSA, which created a lot of panic from its clients, some of whom wanted to close their accounts.
“It is therefore important for Atlas Mara and Equity to be cautious on how they handle the issue going forward in order to retain the confidence of their clients,” Mr Chawala says.
He says if there will be any rebranding decisions to be made, let it not happen overnight but gradually and educating their clients along the way.
“It is a strategic move by Atlas Mara to strengthen its edge in the markets where it operates by drawing on the strong points of Equity Holdings, especially innovate products that have thrived in the Kenyan market, especially the previously unbanked,” Mr Chawala says.
He says it may also be a revaluation of its business model from its initial focus because there have been strong rumours, including for Zambia, that Bob Diamond overpaid for some of the acquisitions as his bank entered some markets.
“But more importantly, it is a long-held business strategy to refocus operations, including changing equity structures through heaving off some operations, strategic alliances and acquisitions,” Mr Chawala says.
Seasoned banker Simataa Simataa says if all is in order (approvals and otherwise), there should be no cause for fear because Equity Group Holdings is a well-known party, which is doing very well and seems to have a different approach to banking.
Mr Simataa says the merger between Equity Group Holdings and Atlas Mara is an act of confidence in our economy.
“If the economy was as bad as the language on the streets, [Equity Group Holdings] would not have come,” Mr Simataa says.
He says the impending arrival of Equity Group Holdings is a good sign for the market and the economy.
Mr Simataa says the firm will bring a different attitude to the country’s banking sector and will make everybody sit up.
Overall, customers shall benefit through expected upped service delivery and bank sustainability because central banks are generally very alert to prevent bank failures because of the potential to cause huge disruptions in the financial markets.
Commenting on the proposed transaction, Atlas Mara Zambia managing director James Koni said, “As Atlas Mara Zambia, we are very excited about this new partnership for Atlas Mara Zambia. Equity Group Holdings Plc (EGH), which is a large diverse financial services conglomerate, has a customer base in excess of 9.2 million in six East and Central African countries, namely Kenya, Rwanda, South Sudan, Democratic Republic of Congo, Uganda and Tanzania, making it one of the largest commercial banks on the African continent by customer numbers.”
Equity Group is a renowned bank and has won a number of global accolades. It is ranked by the top 1000 Banker as number 11 globally on return on assets, and is also ranked number 35 on soundness of capital. The group is rated AA by Moody’s, an international rating agency. AA is the second highest investment grade rating after AAA.
Much more importantly, Equity Bank is the most innovation financial institution and has delivered strong financial inclusion and customer service using technology in East Africa.
“Our partnership with Equity Group Holdings Plc will give us an opportunity to further consolidate the good work we have done so far for our stakeholders. Equity Group Holdings Plc is a powerhouse for innovation and digital banking. This will firmly position Atlas Mara Zambia to bring first-class digital banking to Zambia,” Mr Koni says.
The author is Zambia Daily Mail editorials editor.