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Bob Diamond snatching up African banks despite the sector’s dismal outlook

Bob Diamond, co-founder of Atlas Mara.

Bob Diamond, co-founder of Atlas Mara.

“We have absolutely no concerns that the underpinnings of ‘Africa Rising’ – if I can use that shorthand – are reversing. It’s more about demographics than it is about oil,” said Bob Diamond, former Barclays boss and co-founder of Atlas Mara, at the World Economic Forum in Davos this week.   

Atlas Mara is an Africa-focused financial services investment group that Diamond founded with Dubai-based businessman, Ashish Thakkar, in November 2013. The business has since made eight acquisitions in seven sub-Saharan African countries, with the most recent being concluded in Rwanda this year.

In an investment of around US$21m, Atlas Mara has bought a majority stake in Banque Populaire de Rwanda (BPR), and merged it with the commercial arm of the Development Bank of Rwanda (BRD), which the firm acquired in 2014. The merger makes BPR Rwanda’s second largest bank by assets, and first in terms of number of bank branches – now at 190 across the country.

Diamond hinted that there is potential to expand regionally. “The East African Community is 250 million people… All in all we couldn’t be more delighted with the position that we have, and the opportunity this presents going forward to be a key part of not just sub-Saharan Africa, but even more the East African community.”

The firm has also located its R&D hub in Kigali.

Optimism despite fallen share price

Diamond said that while current global economic conditions have posed challenges for African markets, this has not deterred him from investing in the continent.

“This challenging environment will impact sub-Saharan Africa… But if you asked Ashish and I if we want to invest more or less in the medium to long term, there is no question we want to invest more. This is a great opportunity for us.”

However, investors have not been so optimistic. Shares in Atlas Mara – listed on the London Stock Exchange – have fallen around 60% since its December 2013 initial public offering.

Last week rating agency Fitch gave a negative outlook for the banking sector in sub-Saharan Africa for 2016 as “sovereign worries raise bank risk”.

“As a result of strong and multiple challenges, we believe sub-Saharan Africa banks are likely to face slower growth, weaker earnings, worsening asset quality and tighter liquidity and capitalisation,” stated the agency in a release.

Barclays’ new CEO, Jes Staley, is said to be considering selling the firm’s stake in Barclays Africa Group which houses much of its African business.

Atlas Mara, on the other hand, has acquired banking operations in Botswana, Zimbabwe, Zambia, Tanzania, Mozambique, Rwanda and Nigeria, and Diamond said he hopes to expand this to “10 to 15 key countries”.

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