CBA secures Sh2.5bn from South Africa’s Standard Bank

Top-tier lender Commercial Bank of Africa (CBA) has received Sh2.5 billion ($25 million) from Standard Bank of South Africa in a one-year bank-to-bank lending.

CBA used Government of Kenya bonds as collateral in the transaction that operates as a horizontal repurchasing agreement (repo) where a bank lends securities to another without going through the central bank.

In the Kenya horizontal repo market, there is no movement or transfer of the legal ownership of the collateral but in the CBA-Standard Bank transaction the transfer actually took place.

The deal was facilitated and guaranteed by Frontclear, an international development finance institution that provides credit guarantees for interbank markets.

“In March 2016, Commercial Bank of Africa and Standard Bank of South Africa executed a $25 million cross-currency repo transaction,” said the partner companies in a joint statement.

In the statement, CBA head of treasury Raphael Agung said the transaction would allow the bank to lengthen the funding side thereby strengthening the balance sheet.

“This repo transaction has allowed us to term out our funding by a considerable magnitude thereby infusing the much-needed stability to our balance sheet,” said Mr Agung.