Standard Chartered Bank will use its new head office in Nairobi as the regional hub, adding impetus to Kenya’s plans to become a top financial centre in Africa.
The bank said the new office block, built at a cost of Sh3.3 billion, will support operations in Uganda, Tanzania, Zambia, Botswana and South Africa on a real-time basis.
“We appreciate your recognition of Nairobi as a strategic location for your regional business,” said President Kibaki at the official opening yesterday adding: “This is consistent with our goal of making Nairobi the regional financial centre.”
Standard Chartered Plc joins its peer HSBC, which announced in March that it had secured a banking licence from the industry regulator Central Bank of Kenya (CBK) to set up a representative office to act as launching pad into East Africa.
Visa International, a payment systems services company has also started operations in Nairobi to serve all markets in the region, while US bank JP Morgan Chase is eyeing an office in the Kenyan capital.
StanChart’s move confirms Kenya’s prominence as a key market for the London-based lender which holds a controlling stake in the Kenyan subsidiary, as it seeks to consolidate its footprint in the emerging economies in Africa.
The bank’s shareholding structure by the end of 2010 indicated that Standard Chartered Holding (Africa) BV held a 73.87 per cent stake in the Kenyan subsidiary, in the same year that it acquired the custodial business from its rival Barclays at Sh3.5 billion. Sir John Peace, the StanChart group chairman, said that the bank was keen on supporting trade opportunities arising from the ‘explosive growth’ on the continent as it emerges as a top investment destination globally.
“We are keen to finance the trade opportunities arising from the huge capital inflows into the continent from China and India in infrastructure development, agriculture and consumption,” said Mr Peace. He added that the bank was confident about the credit appetite amongst Kenya’s consumers who have traditionally driven the take-up of bank loans, with data from CBK indicating that private sector took up about 14 per cent of the Sh888 billion in loans extended to the private sector by December 2010.
Trade and manufacturing sectors completed the top three borrowers with Sh153 billion and Sh112 billion respectively in loans with the prevailing economic growth presenting additional lending opportunities for commercial banks.
Prof Njuguna Ndung’u, the CBK governor, who was also present at the official opening, said that a survey carried out by the Monetary Policy Committee indicated that personal loan accounts accounted for 70 per cent of the two million loan accounts in the industry.
This indicates of the strong credit appetite by households for personal consumption which has been attributed to rising income levels in Kenya’s middle income population segment.
StanChart sold its previous Moi Avenue headquarters building to the late Nelson Muguku.
David Masika, a partner at Lloyd Masika Limited—the firm managing the yet-to-be renamed StanChart Building confirmed the acquisition earlier in year.
“The family of the late Nelson Muguku bought the StanChart Building earlier in the year, but am not at liberty to disclose the price it paid for it,” said Mr Masika.
A source familiar with the transaction details, but who requested anonymity said that StanChart sold the building at Sh600 million, with details of the transfer expected to be captured in the 2011 annual report.
The bank said that shifting its new head offices from Nairobi’s central business district was informed by the need for additional space.
The new location has a capacity of more than 900 staff while its former offices could only accommodate 300.