SA bank seeks to tap regional deals from Nairobi office
South Africa’s FirstRand Bank will scout for large regional financing deals through its newly opened Nairobi office, head of investment banking at the institution, Michael Larbie, has said.
The lender will target big infrastructure, resource and asset financing deals, Mr Larbie told the Business Daily on Friday after the Central Bank of Kenya (CBK) announced that it had granted authority to FirstRand Bank to open a representative office in Kenya.
“Target clients include large corporates (in) manufacturing, telecom, agriculture, oil and gas,” industries, said Mr Larbie.
The lender, he said, will also focus on energy and power firms, government parastatals, fast moving consumer good dealers, services, logistics and transportation, and financial institutions.
FirstRand, which is South Africa’s second largest bank, becomes the fourth international financial institution to be granted a licence to operate a representative office in Nairobi, giving impetus to the Kenyan capital’s plan to become a regional financing hub.
Hongkong Shanghai Banking Corporation (HSBC) was granted a licence in April, South Africa’s Nedbank set up offices in June last year, and HDFC Bank of India got authorisation in June 2008.
Mr Larbie said FirstRand’s Nairobi office was already operational.
The bank had opened offices in Nairobi to tap the “growing infrastructure needs and projects,” in a country seen as a gateway to East Africa’s economy.
The lender said it already has some clients in Kenya and the region.
The licence will make it easier for one of South Africa’s largest banks that engages in corporate and retail banking, investment banking, and asset financing services to hunt for deals in the country, though it cannot mobilise deposits.
Besides South Africa, FirstRand has a presence in Namibia, Botswana, Lesotho, Mozambique, Swaziland, Tanzania, and Zambia. It has other representative offices in Nigeria, Angola, China, and Dubai, and a branch in London, and India.
CBK said that foreign banks’ interest in Kenya’s banking sector was growing, supporting the country’s aspiration to become a premier regional financial services hub.
The entry of foreign players will promote competition and diversify the current offering of financial services, the regulator added. Mr Mugo Kibati, the director general of the Vision 2030 Secretariat, termed Kenya “one of the most sophisticated financial services markets” in Africa. He said international banks were attracted to the country by a number of factors including the wide regional market and developed information technology infrastructure.
“IT has enhanced the country’s financial services and there is a market.
It is a fast growing economy with the East African community integration,” he said, adding that the setting up shop of multinationals is not isolated to financial services.
Grow market
Kenya is increasingly becoming a hub for other large companies which are looking to grow their market in the region such as General Electric, Coca Cola, Pepsi, and computer company IBM.
Mr Kennedy Manyala, the general manager at Kenya Investment Authority, said the financial sector in the country had done well over time and profitability had been stable adding that once larger projects such as those requiring public private partnerships start picking up there will be more vibrancy in the sector. “There has also been sound financial management in the sector,” he said, adding that though the international banks may have an idea of the environment they might be looking to study what kind of products will work for them in the country by initially opening up representative offices.
On Friday, Standard Investment Bank officials said that outlook for the banking sector was positive and assigned a “buy” rating for banking stocks based on low valuations.
