Companies

CBK grants Egypt’s Banque Misr–S.A.E. licence

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Central Bank of Kenya. FILE PHOTO | NMG

Egypt’s second-largest lender Banque Misr–S.A.E. has acquired a licence to operate a representative office in Kenya, eyeing trade finance deals for Egyptian businesses looking to venture into the East Africa region.

The Central Bank of Kenya said Tuesday that it had granted the licence to the State-owned lender, which now becomes the second Egyptian bank with a presence in Nairobi—after Egypt’s largest private lender Commercial International Bank bought a controlling stake in Kenya’s Tier-III Mayfair Bank in 2020.

The new licence now brings to 10 the number of representative offices of foreign banks that are operational in Nairobi.

These units carry out research, marketing and liaison roles on behalf of their parent banks. They are however barred from conducting commercial banking services which include deposit taking unless they open a full-fledged subsidiary or branch.

“The CBK announces the granting of authority to Banque Misr–S.A.E. of Egypt to establish a Representative Office in Kenya by the name Banque Misr – S.A.E.– Kenya Representative Office,” said the CBK in a statement.

“The Representative Office is expected to play a catalytic role in strengthening the long-standing trade relationship between Egypt and Kenya.” 

Officials of the bank had indicated a year ago that they had made the application for the Kenya office licence alongside similar bids in Somalia and Djibouti.

The bank also said it would borrow $250 million (Sh29.7 billion) from international lenders to fund the Kenya expansion.

Foreign bank representative offices conducted business worth $3.3 billion (Sh392.4 billion) last year, a slight reduction compared to 2020’s transaction volume of $3.4 billion (Sh404.3 billion).

Trade finance accounted for the biggest share of deals at $1.1 billion (Sh130.8 billion), followed by correspondent banking at $700 million (Sh83.2 billion).

Correspondent banking involves transactions originating from other overseas branches conducted through the Kenyan office where the local parties or partners are based.

Specialised and syndicated finance deals each accounted for $400 million (Sh47.6 billion) worth of transactions in the year ending December 2021.