Customers at a KCB banking hall in Nairobi. The bank will repay the credit over a period of three years. FILE
What you need to know:
KCB will use the money for onward lending to small and medium enterprises (SMEs) engaged in cross-border trade.
The Ghana bank said it was awaiting regulatory approval from the CBK to open a representative office in Nairobi.
Representative offices allow international banks to source for trade financing deals, but they are not allowed to collect deposits.
London-based Ghana International Bank has lent KCB Group $30 million (Sh2.5 billion) in a dollar-dominated loan as the foreign bank prepares to open representative office in Nairobi by end of January.
KCB will use the money for onward lending to small and medium enterprises (SMEs) engaged in cross-border trade, with the dollar-dominated facility cushioning them from losses linked to currency fluctuations.
The Ghana bank said it was awaiting regulatory approval from the Central Bank of Kenya (CBK) to open shop in Nairobi where it will scout for financing deals in planned big-ticket projects in Kenya and the Eastern Africa, especially for infrastructure, oil and gas.
Representative offices allow international banks to source for trade financing deals, but they are not allowed to collect deposits.
“We see a lot of opportunities in infrastructure financing such as energy sector, aviation, transport and we are also looking at the oil and gas sector, which we actively finance in Ghana and Nigeria,” said Joe Mensah, chief executive of Ghana International Bank.
The bank becomes the eighth global lender and the first from West Africa to to establish a representative office in Nairobi, further boosting the Kenyan capital’s claim to the status of a regional financial centre.
Other international lenders that have opened similar offices in Kenya include HSBC, Nedbank, First Rand, Bank of China, Bank of India, HDFC Bank and Bank of Kigali.
Mr Mensah said the KCB deal increased the Ghana International’s loan portfolio in Kenya to $100 million (Sh8.6 billion).
KCB will repay the credit over a period of three years, including a one-year grace period. The banks declined to reveal the cost of the loan.
Ghana International Bank targets to loan about $250 million next year to banks and firms across East Africa.
This is the second time in less than three years that KCB has turned to an international lender to raise funds for onward lending. In 2011, it received $105 million from IFC for SME lending.
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