Regulator awards Ecobank licence to set up investment banking subsidiary
Ecobank branch in Nairobi.
What you need to know:
Capital Markets Authority has licensed the pan-African bank to open EBI Investment Corporation Kenya Limited, a subsidiary that it will use to make deals in the region.
EBI Investment will be housed under Ecobank Capital which handles the investment banking operations in all countries where the bank operates.
Ecobank joins KCB Group that opened KCB Capital in February and Chase Bank that got approval to open Genghis Capital in January.
Ecobank has become the third lender to set up an investment banking arm this year as banks flex muscles in a field once dominated by stockbrokers.
Capital Markets Authority (CMA) has licensed the pan-African bank to open EBI Investment Corporation Kenya Limited, a subsidiary that it will use to make deals in the region.
EBI Investment will be housed under Ecobank Capital which handles the investment banking operations in all countries where the bank operates.
Ecobank joins KCB Group that opened KCB Capital in February and Chase Bank that got approval to open Genghis Capital in January.
The bank said it would also inject $100 million (Sh8.8 billion) over the next two years into an investment it expects to mature over the next few years.
“Increased corporate activities in the East Africa and SADC (Southern African Development Community) regions have created a vibrant environment for investment banking,” said Ecobank Kenya managing director Ehouman Kassi in a statement.
Ecobank entry into investment banking makes it the ninth bank licensee. Others are Barclays Financial Services, NIC Capital, SBG Securities (CFC Stanbic), CBA Capital (Commercial Bank of Africa), ABC Bank (ABC Capital), Kingdom Securities (Cooperative Bank), and Equity Investment Bank (Equity Bank).
African Alliance, Renaissance Capital, Standard, Faida and Dyer & Blair Investment Bank are the only licensees that are not subsidiaries of fully-fledged banks.
It is commercial banks that have mostly sought investment banking licensing since 2011 when the CMA introduced steep capital adequacy laws.
The regulator increased the minimum capital needed to operate an investment bank to Sh250 million from Sh30 million. However, the going has not been easy, according to analysts due to stiff competition.
“Investment banking is very tough business,” said Johnson Nderi, corporate finance advisory manager at ABC Capital, adding that both local and foreign banks have found it hard to penetrate the business.
The CMA rule saw ApexAfrica, Suntra and Sterling Capital have their licences downgraded to stockbroking from investment bank.
Ecobank Capital managing director Moyo Kamgaing said the investment bank is in particular looking for deals in the oil, gas and power sectors.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
