Nigeria bank injects Sh2.5bn into Fina for corporate deals
What you need to know:
GTBank will set up shop in Tanzania through Fina Bank by 2016 as it seeks a larger presence in East Africa after completing the purchase of a 70 per cent stake in the Kenyan lender for $100 million (Sh8.64 billion) in December.
Guaranty Trust Bank group CEO Olesegun Agbaje said that the enhanced capital would help its Kenyan subsidiary get a larger share of high-end SMEs and corporate banking.
It will scout deals locally and tap Guaranty Bank in instances where the lending is beyond the limits of the local bank.
Nigeria’s Guaranty Trust Bank has injected Sh2.5 billion ($30 million) capital in Fina Bank to tap larger corporate deals via the middle-tier lender it has just acquired.
The London-listed bank will set up shop in Tanzania through Fina Bank by 2016 as it seeks a larger presence in East Africa after completing the purchase of a 70 per cent stake in the Kenyan lender for $100 million (Sh8.64 billion) in December.
The funds will increase the core capital of Fina Bank, which has changed its identity to Guaranty Trust Bank, above Sh4 billion — which will allow it to lend Sh1 billion to a single borrower.
Kenya banking laws caps lending to a single borrower at 25 per cent of a bank’s core capital.
This meant that that Fina Bank could lend Sh350 million based on its September core capital of Sh1.4 billion.
Guaranty Trust Bank group CEO Olesegun Agbaje said that the enhanced capital would help its Kenyan subsidiary get a larger share of high-end SMEs and corporate banking.
“We have brought in $30 million in additional capital to help move the bank to the top-tier,” Mr Agbaje said in Nairobi yesterday at the launch of the Guaranty brand.
“This will help us lend to high-end SMEs, corporates and oil and gas sector which needs us to be big.”
He added that the GTBank plans to plough back profits generated from the East African operations that also include Rwanda and Uganda.
Guaranty Trust Bank acquired the majority stake in Fina Bank, set up in 1991, through a share purchase from current stakeholders and direct investment in the Sh8.6 billion.
It was not clear whether the Sh2.5 billion was direct investment and the remaining Sh6.1 billion was paid to Fina Bank owners.
Fina Bank, which mainly specialises in corporate finance of mid-sized businesses, will also leverage on Guaranty Bank’s wider pool of funds and reach on the continent.
It will scout deals locally and tap Guaranty Bank in instances where the lending is beyond the limits of the local bank.
Oil and gas exploration and drilling is a capital intensive undertaking and industry experts have said that foreign banks are better positioned to exploit the emerging opportunities than Kenyan lenders since the amounts involved are beyond most local banks’ balance sheets.
Guaranty Trust Bank had $10.76 billion (Sh930 billion) in net assets in 2012, or two-fifths of the Kenyan industry’s combined balance sheet of Sh2.33 trillion in the same year.
It joins West African peers UBA Kenya and Ecobank which recently set up shop in Kenya.
Guaranty Trust Bank has tapped Adekunle Sonola as CEO and Olaboyo Veracruz as executive director for the Kenyan unit in changes that saw it name six new board members.
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