The big three: A review of the country’s largest lenders

Despite growing competition, Gabon’s three largest lenders continue to maintain substantial market shares. Combined, BGFIB ank, Banque Internationale pour le Commerce et l’Industrie du Gabon (BICIG), and Union Gabonaise de Banques (UGB) accounted for more than 80% of all loans and deposits in the country as of March 2012, according to the Professional Association of Credit Institutions (Association Professionnelle des Établissements de Crédit, APEC). In addition, these three institutions were responsible for about 86% of all accounts.

Over the years, these lenders have built deep relationships with both the state and many of Gabon’s biggest companies, giving them a strong and durable presence in the market and considerable influence in the industry. The arrival of new foreign banks, however, is challenging their dominance, particularly with regard to small and medium-sized enterprises (SMEs) and retail customers.

MARKET SHARES: Regardless of the metric used, Gabon’s top banks are a major force in the marketplace. BGFI, which is by far the biggest bank in the country, had deposits worth CFA859bn (€1.3bn), about 47% of the total, and outstanding loans of CFA642.2bn (€963.3m), representing 46% of the total as of March 2012. While BGFI’s share of deposits has held steady since December 2011, its share of loans has fallen slightly from 49%.

BGFI has traditionally relied on medium-sized enterprises and the state for the majority of its business. BGFI accounts for 75% of the state’s debt that is held with Gabonese banks, equivalent to CFA218.8bn (€328.2m). BICIG holds the second-largest amount of public debt, at CFA45bn (€67.5m) or 15% of the total. Meanwhile, BGFI accounts for CFA33.6bn (€50.4m) of state deposits while BICIG holds CFA15.4bn (€23.1m). However, all three top banks rely on the private sector for the majority of both their deposits and loans. In terms of commercial loans, BGFI comes first with CFA394.6bn (€591.9m) or 52% of the total, followed by UGB with CFA186.1bn (€279.2m), or 24% of the total. BICIG has a commercial loan book valued at CFA76.8bn (€115.2m), or 10% of the total. With regard to commercial deposits, BGFI is in the lead with CFA504.1bn (€756.2m), or 50% of the total, followed by BICIG with CFA142.4bn (€213.6m), or 14%. UGB is third with CFA115.2bn (€172.8m), or 11%.

Reflecting BGFI’s focus on commercial and public clients, it loans the least to individuals, with only 15% of the market, or CFA27.9bn (€41.9m). UGB is the leader in retail loans, with CFA73.8bn (€110.7m), or 39% of the market. BICIG loans to individuals stand at CFA45bn (€67.5m), or 24% of the market.

BGFI: BGFIB ank is a wholly owned unit of the BGFI Group, a financial services company based in Gabon with operations in eight francophone African countries as well as a representative office in France. As of the end of 2011, BGFI Group’s main shareholders were private investors (39%), regional holding firm Compagnie du Komo (25%), company employees (11%) and the BGD (7%). As of the end of 2011, BGFI had six branches in Libreville, with one each in Port-Gentil and Moanda. The lender also has 25 ATMs across the country, mainly in the major cities.

BGFI has four main divisions: commercial banking, asset management, insurance and real estate. BGFI offers a broad spectrum of services, focusing on its core clients of wealthy individuals and mid-sized private sector businesses. Not only is BGFI the leader in commercial banking in the country, it has a longstanding relationship with the government. Through its subsidiary Finatra, BGFI offers consumer credit services as well as leasing to enterprises. BGFI is also the only licensed broker in Gabon at the Central African Stock Exchange.

The lender’s net banking income improved in 2011, in part thanks to new credit agreements and an increase in the use of overdraft facilities by major customers. Profitability also improved in 2011, with net profits amounting to CFA16.04bn (€24.1m) in 2011, an increase of 14% over the prior year.

BICIG: The second-largest bank, BICIG has been in Gabon since 1973. The French financial giant BNP Paribas owns a 47% stake in the lender, while the remainder is held by the state, which owns 26%, and private investors, who own 27%. As of the end of 2011, BICIG had 488 employees, 12 branches and one business centre, according to BNP.

BICIG has traditionally focused more on corporate and retail banking, although it also has a government lending arm. Similar to BGFI, BICIG offers a range of services, from consumer credit and insurance to commercial banking and finance. “We have traditionally focused on commercial and industrial banking, but faced with growing competition, we are focusing more on the retail side of our business,” Michel Dubois, the president of BICIG, told OBG.

UGB: UGB, which was formerly part of the French bank Crédit Agricole, is now owned by the Moroccan banking conglomerate Attijarawafa Bank, which bought Crédit Agricole’s African assets in 2009. As of mid-2012, the bank had 11 branches in Gabon, eight of which were located in Libreville.

In contrast to BGFI and BICIG, UGB has been focusing on the retail market, installing ATMs in all of the major hotels in Libreville and opening new branches. According to Redouane Bennis, the assistant director-general of UGB, the bank plans to set up five or six additional ATMs in Libreville by the end of 2012. “UGB has been aggressively expanding in and around Libreville. They are looking to gain customers by increasing their proximity and opening up areas of Libreville that were formerly unbanked,” Pierre-Marie Ntoko, the director-general of APEC, told OBG. UGB is also one of the few banks to offer a Visa branded credit card in Gabon.

NEW PRODUCTS: In part due to increasing competition from new entrants such as Ecobank and UBA, the largest banks in Gabon are starting to focus to a greater extent on retail banking and increasing their proximity to customers. For example, to expand its coverage among lower-income clients and those in the interior of the country, BGFIB ank founded Loxia EMF, a microfinance bank, which it is planning to turn into a full-service bank by the end of 2012. BGFI has also partnered with Bharti Airtel to roll out the first mobile money system in Gabon, Airtel Money, which lauched operations in March 2012 (see analysis). The service can be used to transfer money and pay utilities bills, among other things.

BICIG is moving in the same direction. In June 2012, the second-largest bank rolled out a new service called BICIG Cash. This service is designed to help merchants who sell services or wares in the interior and do not have access to banking services while they travel. This new product will allow them to deposit money in the interior though the mobile payment system, obviating the need to carry large amounts of cash. BICIG also currently offers a service by which customers can check their balances using their mobile phones, and it is looking to establish a mobile banking product like BGFI.

The big banks are also eyeing an expansion in commercial banking services by taking advantage of the development of the special economic zones (SEZ) under construction near Libreville at Nkok and in Port-Gentil. The SEZs are attracting a great deal of investment and will likely generate opportunities to finance new construction and industrial development as well as sign up new retail customers. UGB has already said it will open a branch at Nkok and the other big banks are likely to follow.

Robust economic growth in Gabon, driven by high oil prices and economic diversification, should generate healthy profits at these three banks over the foreseeable future. However, competition from new arrivals could erode their position. Nonetheless, the big players continue to expand and introduce new products, which in turn may help them to maintain their traditionally dominant role in the economy.