Congo's Third-Biggest Bank Cuts Cash Withdrawals Over Credit

  • Bank says it's facing `difficult liquidity position'
  • Congo prime minister wants measures taken to help bank

Banque International Pour l’Afrique au Congo limited cash withdrawals after a rearrangement of credit lines from the central bank in the Democratic Republic of Congo forced the lender to shut its branches last week.

BIAC, as the bank is known, negotiated an emergency credit line with the Banque Centrale du Congo of as much as 16 billion Congolese francs ($17 million) and is working with the government to find “a lasting solution for refinancing from the central bank,” the Kinshasa-based lender said in an e-mailed statement Wednesday. The central bank, which placed the lender under its supervision in June, cut its access to as much as 40 billion Congolese francs at the end February, officially to help reduce money supply and control inflation.

“The brutal suspension of this line of credit placed the bank in a difficult liquidity position,” BIAC said. “The bank is therefore not bankrupt. Beyond this temporary operational difficulty, the fundamentals of BIAC are solid.”

The banking industry in Africa’s biggest copper producer has been trying to rebuild consumer trust since average inflation of 684 percent during the 1990s and the collapse of several banks wiped out many people’s savings. The economy has grown at more than 7 percent a year for the past five years and the country now has 18 lenders. The collapse in the prices of copper, oil and other key exports is threatening to check that growth, reducing foreign-exchange reserves and increasing pressure on the local currency.

BIAC, which says it’s Congo’s third-biggest lender by assets, closed its doors to customers earlier than usual on March 25 and remained shut on March 26 to implement “refinancing measures” outlined by the central bank, it said in an e-mailed statement March 28. After a central bank audit that began in June, the regulator said BIAC needs to improve profitability and increase its capital.

While the bank’s outlets are now open, signs in the company’s main branch on Boulevard 30 Juin in Kinshasa on Wednesday advised customers that cash withdrawals are limited to $500, or 500,000 Congolese francs, until further notice. BIAC has more than 400,000 accounts and total assets of $556 million, according to its website.

The central bank in 2013 asked Michel Losembe, the former chief executive officer of Citigroup Inc.’s Congolese unit, to oversee a restructuring and capitalization program at BIAC. On March 28, Prime Minister Augustin Matata Ponyo’s office warned in an e-mailed statement that “adequate measures” should be taken to preserve the viability of the bank and secure savings.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE