Central Bank admits error in listing Ecobank as small lender

An Ecobank branch in Nairobi. PHOTO | FILE
An Ecobank branch in Nairobi. PHOTO | FILE 

The Central Bank of Kenya (CBK) has admitted it erred by classifying Ecobank as a small lender and reinstated it to the medium-sized category.

CBK amended ranking of its annual survey with sources, saying the regulator had mixed up Ecobank numbers with those of Equatorial Bank leading to the error. The regulator recorded Ecobank deposits as Sh13.8 billion while the lender held Sh25.3 billion.

In a letter addressed to Ecobank on July 30, CBK’s banking supervision department said that Ecobank’s weighted market share was 1.15 per cent and not 0.96 per cent as it had indicated earlier.

There are 16 medium-sized banks in the country while small lenders number 21. CBK has classified six lenders as large banks.

The misclassification of the bank as a small lender had come as unwelcome news for Ecobank whose Togo-based parent is ranked as the eighth largest bank in Africa and has been pumping more cash in the local unit.

Small local lenders are usually at a disadvantage as they have to pay a higher price to attract deposits due to perceived risk and also charge lower lending rates, leaving them to enjoy smaller interest margins.

Ecobank has recorded mixed performance since its entry into Kenya in 2008 through the acquisition of East Africa Building Society.

It reported profit in the first three years, before it dropped to losses in 2011, weighed down by expensive deposits as it sought to grow its base during a high-interest rate regime.

The bank has been offloading expensive deposits as it seeks to return back to profit after a net loss of Sh881 million last year. 

Ecobank is seeking to diversify its business with an eye on investment banking after it was licensed by Capital Markets Authority to open EBI Investment Corporation Kenya Limited, a subsidiary that it will use to make deals in the region.