Takeover raises GTB credit rating

Customers at a former Fina Bank branch in
Customers at a former Fina Bank branch in Nairobi, now GTB Kenya. File 

South African agency Global Credit Ratings has upgraded GTB Kenya’s (formerly known as Fina Bank) creditworthiness following the 70 per cent acquisition by the Nigerian bank. Guaranty Trust Bank (GTB) took over the Kenyan bank in December 2013 and injected capital to lift the rating.

“Global Credit Ratings has upgraded the national scale ratings assigned to Guaranty Trust Bank Kenya Limited to BBB+(KE) and A2(KE) in long term and short term respectively; with the outlook accorded as Stable,” it said in a statement.

The last rating on Fina Bank carried out in July 2013, gave the local bank ratings of BBB (KE) and A3 (KE) respectively. The rating agency said the entry of the Nigerian bank, which is larger and with a wider reach, will enable the Kenyan unit leverage on these strengths.

“The upgrade of the bank’s ratings is driven by the group’s capacity to provide support to the bank and the ability of the bank to leverage off the group’s extensive continental presence,” said GCR.

GTB Bank’s acquisition of Fina Bank was worth $100 million (Sh8.8 billion) and the funds went to buy out other shareholders. The parent bank followed this with a $30 million (Sh2.64 billion) capital injection in February this year which has increased the Kenyan subsidiary’s lending ability for the local and regional market.

The bank has branches in Uganda and Rwanda. The first rating on Fina Bank was in September 2007 when it was accorded a credit score off BBB (KE) and A2 (KE). Analysts say banks need to increase their capital if they are to efficiently expand to the rest of the region.

“Initiatives to increase banking sector capital (for example by increasing banks’ minimum capital requirement, or encouraging global banking groups to set up operations in the region) will allow the banking sectors to meet growing demand for credit and further support their growth potential, both domestically and regionally,” said a recent regional banking report by Moody’s.