The nine representative offices transacted deals worth $3.42 billion (Sh368.5 billion), down from $4.67 billion (Sh503.2 billion) in 2019.
Representative offices 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 volume of business handled by representative offices of foreign banks in Kenya dropped by a quarter last year compared to 2019, hit by the disruptions in international trade and investments caused by the Covid-19 pandemic.
The nine representative offices transacted deals worth $3.42 billion (Sh368.5 billion), down from $4.67 billion (Sh503.2 billion) in 2019.
Representative offices 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 decrease is largely due to a slowdown in economic activity coupled with the effects of the Covid-19 pandemic. The activities facilitated largely comprised trade finance, term loans, working capital, bilateral receivable discounting, syndicated finance and correspondent banking,” said Central Bank of Kenya (CBK) in the bank supervision annual report for 2020.
Global trade was heavily disrupted last year as economies locked down in a bid to prevent the spread of the Covid-19 pandemic. This also translated to more conservative investment activity, thus reducing cross-border financial flows that fuel the business of representative offices.
Of their main business lines, only specialised and project finance deals recorded an increase in value last year, respectively by Sh9.7 billion to Sh22.6 billion and Sh5.4 billion to Sh20.5 billion.
Trade finance deals, which are the biggest line of transactions the offices handle, fell by Sh26.9billion to Sh138.9 billion last year. Syndicated finance deals nearly halved, falling bySh43.1 billion to Sh48.5 billion in the period.
Correspondent banking, which accounts for the third largest volume of deals, retreated by Sh2.2 billion to Sh36.7 billion.
Correspondent banking involves transactions originating from other overseas branches conducted through the Kenyan office where the local parties or partners are based.
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