CFC Stanbic Bank opens S Sudan subsidiary
Posted Tuesday, June 12 2012 at 13:50
CFC Stanbic Bank on Tuesday became the third Kenyan lender to open shop in South Sudan in an effort to get a piece of a market that is the most profitable among the regional subsidiaries of local banks.
The bank said it has moved closer to serve its corporate clients such as the UN and other international organisations, which they currently serve from Kenya and hope it will allow CFC Stanbic to break even faster.
It joins KCB and Equity Bank, which have seen their South Sudan subsidiaries emerge their best performing regional shops in a market that has also caught the interest of Family Bank and Co-operative Bank.
“We are moving there (South Sudan) to serve our corporate clients better.
We currently meet their banking needs from Nairobi,” said Greg Brackenridge, the managing director of CFC Stanbic Bank in an earlier interview.
Ranked among the largest banks in the east African nation, CFC Stanbic is controlled by South Africa's Standard Bank through CFC Holdings, which also runs a financial services firm.
"Our entry into South Sudan is in line with our strategic plan to diversify into other markets in the region," Chris Newson, the chief executive officer for Standard Bank Africa, said in a statement.
South Sudan has become more attractive to banks seeking to expand regionally after it officially gained independence from Sudan in July 2011, and moved to rebuild a country ravaged by a two-decade war.
The country accounted for 42 per cent of the 2.3 billion shillings profit that Kenyan banks made from their regional subsidiaries last year, the central bank said in an annual report.
CFC Stanbic has 20 outlets, all in Kenya. It also said it plans to raise funds for its expansion programme through a rights issue.
In July 2011, the South formally broke away from the North, ushering in independence that further raised its attraction as an investment destination while donors are pouring billions to modernise the nation.
Central Bank of Kenya (CBK) says that South Sudan accounted for 42 per cent of the Sh2.3 billion profit that Kenyan banks with regional shops posted in 2011. Uganda accounted for 27.3 per cent and Tanzania 33.8 per cent.
This comes despite Kenyan banks having increasingly focused on the Ugandan market, which has 113 of the 223 branches of the subsidiaries, according to the CBK data.
‘‘Subsidiaries operating in South Sudan accounted for 42 per cent of the total profits, although only two banks have operations there. This demonstrates potential in South Sudan,” said the CBK.
This is the reason financial institutions led by banks are increasingly factoring in South Sudan in their business plans.