London-based Ghana International Bank is set to become the first Ghanaian bank to establish a presence in Kenya following an agreement with a local consultancy to facilitate regional deals.
The bank’s service agreement with the Benaba Limited started on April 1, with the Nairobi office responsible for overseeing penetration into the East, Central and Southern Africa regions.
Last year, the bank lend KCB Group $30 million (Sh2.5 billion) in a dollar-denominated loan payable over three years, bringing its total loan portfolio in the region to $100 million (Sh8.6 billion).
The funds were earmarked by KCB for onward lending to small and medium enterprises (SMEs) engaged in cross-border trade, with the dollar-denominated facility cushioning them from losses linked to currency fluctuations.
“Kenya has been selected as a hub for our eastern African operations. Our new three year plan should see the bank deepen its involvement in the African continent with the establishment of the office in Nairobi expected to drive business in the region,” said Ghana International Bank chairman H. Wampah in a statement to shareholders.
The Ghanaian bank said that it would look at financing deals in big-ticket projects in Kenya and eastern Africa, especially in infrastructure, oil and gas with a target of lending $250 million (Sh21.5 billion) to banks and firms across East Africa next year.
Benaba chief executive Jane Briggs will spearhead the lender’s regional coverage strategy.
She previously worked for PTA Bank, ABN AMRO, Citibank and Loita capital in various senior capacities.
Discovery of commercial oil deposits in Kenya and Uganda, as well as gas in Tanzania has attracted the attention of investors to the region, hence the interest from banks.
The office in Nairobi will also help the bank closely monitor its credit exposure, according to chief executive Joe Mensah.
The bank’s asset base in the sub-region has grown by 166 per cent from $47 million (Sh4 billion) in 2011 to $126 million (Sh11 billion) in 2013 hence the move to establish a local office.
The bank had a total asset base of $1.15 billion (Sh99 billion) as at December 2013, with its net profit for the year standing at$23.3 million (Sh2 billion). The total loan book was $218.7 million (Sh18.8 billion).
Other international lenders that have opened representative offices in Kenya include HSBC, Nedbank, First Rand, Bank of China, Central Bank of India, HDFC Bank and Bank of Kigali.
The Kenyan market has increasingly attracted West African lenders, with the latest entrant being Guaranty Trust Bank — Nigeria’s largest lender by market capitalisation — through acquisition of a 70 per cent in Fina Bank at a price of Sh8.6 billion ($100 million).
Other West African lenders in Kenya include Togo based Ecobank, which has 29 branches in the country, and Nigerian lender UBA Bank.
Ecobank recently announced it will make a $100 million (Sh8.6 billion) capital injection into its Kenyan operation this year, as it eyes regional debt financing and expansion to between 40 and 50 branches.