The Kenya Commercial Bank Tuesday started operations in Burundi market, making it the only bank in the region to have operations in all six eastern African countries.
KCB said it spent about Sh832 million ($10 million) to set up two branches in Bujumbura — the capital city — making it the fifth subsidiary after Tanzania, South Sudan, Uganda and Rwanda.
Kenyan banks have been branching out into the region to grow their earnings and cut reliance on the local market and tap the benefits of the East Africa common market.
“This is a momentous time for KCB as we make history by being the first local bank to have a complete presence in all the countries that make up the East African Community,” said the outgoing KCB chairman Peter Muthoka.
“We offer a one-branch real-time banking concept where a customer is guaranteed service in any of the countries.” The regional market is becoming increasingly important following the formation of the East African Community (EAC) common market, creating room for free movement of factors of production in a market of 130 million people.
The regional subsidiaries have provided a major boost particularly for KCB and Equity after they returned to profit last year after heavy losses in 2010. KCB posted a net profit of Sh332 million from the subsidiaries in the three months to March compared to a loss Sh130 million in the same quarter last year.
Burundi is the smallest economy of all the five EAC member countries, emerging from a long-running civil conflict that has held back development of its financial sector.