CBA awaits central bank approval to set up in Uganda
Posted Wednesday, February 13 2013 at 20:17
- The lender says it is waiting for regulatory approvals from the Bank of Uganda, before setting up its first branch in Kampala.
- The bank did not provide further details on the exact amount it has set aside to fund its regional expansion.
Commercial Bank of Africa (CBA) will begin operations in Uganda by the end of the year as part of an expansion programme into eastern and southern Africa.
The lender says it is waiting for regulatory approvals from the Bank of Uganda, before setting up its first branch in Kampala.
CBA Kenya chief executive Jeremy Ngunze said the bank plans to enter regional markets such as South Sudan, Rwanda, Burundi, Mozambique, Zambia, Zimbabwe, Ethiopia and the Democratic Republic of the Congo within the next five years.
“We have applied for a licence to enter Uganda. It will be a greenfield project where we will begin with a single branch in Kampala,” Mr Ngunze said on Wednesday.
“Uganda is a natural target for us as we already have Kenyan clients with businesses in this market,” Mr Ngunze told the Business Daily.
The mid-sized bank said it will fund the growth strategy through the Sh1.5 billion it raised through a private placement last year as well as shareholder funds.
The bank did not provide further details on the exact amount it has set aside to fund its regional expansion.
CBA already has operations in Tanzania and its move to Uganda and other countries is aimed at growing revenues and cutting dependence on Kenya’s highly competitive banking market.
Data from the Central Bank of Kenya shows that subsidiaries operating in Uganda accounted for 27.3 per cent of the total profits recorded by Kenyan banks in the year 2011.
Mr Ngunze was speaking after signing a Sh63 million deal with American IT firm Hewlett-Packard to improve the bank’s data storage capacity to meet growing demand ahead of the scheduled expansion.
HP will deploy its virtual storage product dubbed 3PAR Utility Storage at CBA’s Nairobi headquarters and across the lender’s 21 branches in Kenya and eight in Tanzania.
“We expect cost savings of up to 50 per cent and the shared services hub here in Nairobi helps save more than Sh43 million in set-up costs during expansion,” the bank said.
“Our data centre will be simpler, more secure, more flexible, more efficient and less expensive to operate, thanks to a consolidated system that is a convergence of server, storage and networking.”
CBA is Kenya’s largest privately owned bank and is ranked 11th in terms of profitability, posting Sh2.3 billion in net profit for the first nine months of last year.