27 April 2011

Rwanda: Development Bank Takes Full Control of Housing Bank

Rwanda Development Bank (BRD), yesterday, took full control of Rwanda Housing Bank (BHR) in a move aimed at boosting mortgage lending in the country.

The Minister of Finance and Economic Planning, John Rwangombwa, said that the takeover aims at transforming BHR into a mortgage re-financing facility, which will provide mortgage funds to other financial institutions.

"The acquisition will create a strong and better positioned bank to provide long term project loans, home loans, hence making it more competitive and profitable to serve the country," the Minister explained during handover ceremony.

The Minister added that the decision to wind down BHR, which is valued at Rwf14 billion by assets, is part of the government's wider initiative to consolidate resources and build up institutions that can deliver more effectively on their mandate.

With a combined asset value of Rwf72 billion, Rwangombwa said that the move is expected to trim operating costs and strengthen shareholders equity of over Rwf25 billion in the two institutions.

Mortgage lending in the country is still small at between 15 and 20 percent of the Rwf420 billion consolidated loan book for commercial banks, according to the Governor of the National Bank of Rwanda (BNR), Francois Knaimba.

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