Angolan banking sector could witness mergers shortly due to the capital requirements
In an interview with the Financial Times, José de Lima Massano, Governor of National Bank of Angola, indicated that commercial banks that would not meet the capital requirements would be severely sanctioned.
During an Africa-focused event organized in London, the official indicated that some banks would be able to meet the requirement but those financial institutions that would be unable to do so would simply be closed.
The 29 financial institutions of that country (third African largest economy in terms of GDP and second oil producer in the continent) are allowed up to late December 2018 to take appropriate measures. Let’s note that out of those 29 institutions, four lead 80% of the country’s market.
This leads to thoughts that there could soon be mergers. The eventuality of acquisitions however is less likely. The Angolan banking sector has an important volume of bad debts, some of which are loans with political connotations.
It will be difficult for small banks in the country to boost their equity in those conditions. This change in the Angolan banking regulation is the result of reforms initiated by the government of João Lourenço who, in 2017, replaced José Eduardo dos Santos, Angola’s former president. These measures are aimed at stabilizing the country’s economy.
Source: Ecofin Agency