The value of business facilitated by representative offices of foreign banks in Kenya grew by 11.5 percent last year, even as the local currency equivalent of the transactions fell due to the shilling’s appreciation against the dollar.
New data by the Central Bank of Kenya (CBK) shows that the nine representative offices handled business worth $2.9 billion last year, up from $2.6 billion in 2023.
In shilling terms, though, the value of the transactions fell from Sh413.3 billion in 2023 to Sh379.5 billion in 2024, reflecting the effect of the shilling’s 21 percent appreciation versus the dollar last year.
The dollar’s official exchange rate stood at Sh156.46 at the end of 2023, and Sh129.30 in December 2024.
“Overall, all the representative offices operated in compliance with the applicable regulatory requirements during the year with no supervisory concerns arising,” said CBK in the supervision report.
The representative offices carry out research, marketing and liaison roles on behalf of their parent banks, but unlike fully fledged branches or subsidiaries, they are barred from conducting commercial banking services such as deposit taking.
They help their parent banks to develop products and services tailored to the external market, and provide useful early insights on opportunities and risks that can lead to improved business opportunities and revenue growth in these markets.
In Kenya, the offices mainly facilitate project and trade finance, correspondent banking, and syndicated and corporate finance.
In shilling terms, trade finance was the largest business line for the offices last year at Sh85.3 billion, although this marked a decline from Sh97.1 billion in 2023, followed by correspondent banking at Sh66.8 billion (2023: Sh51.9 billion) and specialised finance at Sh54.4 billion (2023: Sh11.1 billion).
Correspondent banking involves transactions originating from other overseas branches conducted through the Kenyan office, where the local parties or partners are based.
Property finance business declined from Sh62.7 billion in 2023 to Sh6.6 billion last year, while syndicated finance transactions declined from Sh40.3 billion to Sh18.3 billion. The value of project financing deals also fell, from Sh21.7 billion to Sh19.2 billion.
