Foreign Exchange Rates

Renault Koleos Promotion

Advert Request Banner

Advert Request Banner

Wednesday, 17 May 2017

KENYA'S COMMERCIAL BANK OF AFRICA IN BID TO ACQUIRE RWANDA'S CRANE BANK


Commercial Bank of Africa (CBA), which is majority-owned by the Kenyatta family, is in the running to acquire the Rwandese subsidiary of Uganda’s Crane Bank in what marks the latest expansion of the wealthy family’s empire.

CBA already operates an equivalent of mobile banking service M-Shwari in Rwanda using a microfinance licence.

The Nairobi-based lender is looking to outbid rival banks that are also seeking to purchase Crane Bank Rwanda branches currently owned by Dfcu Bank.

The Bank of Uganda last October took over the management of Crane Bank — at the time the country’s fourth-largest lender — due to under-capitalisation and in January sold it to Dfcu, which is now seeking to offload the Rwandese unit.

If CBA is successful in its bid, the mid-tier Kenyan lender will have a physical presence in four countries, including Uganda and Tanzania, moving it closer to its target of having operations in 10 African countries.

The Business Daily’s sources indicate that Dfcu’s sale of part of its Rwandese business is now awaiting regulatory approval and that the deal should be complete by the end of this month.

CBA had not responded to our queries on the pending acquisition by the time this story was published.

The transaction price and timelines for conclusion of the deal are not yet clear.

The Kenyatta business empire has in recent years made strategic acquisitions in the hospitality, dairy, media and banking sectors.

Brookside Dairy, Heritage Hotels, CBA and Mediamax Group top the list of the businesses associated with the Kenyatta family.

Milk processor Brookside, one of the family’s flagship companies, is leading the charge, having acquired Buzeki Dairy — the maker of the Molo Milk brand — in 2013 for Sh1.1 billion.

The family also awakened hospitality giant Heritage Hotels East Africa with a management shakeup and the announcement of an expansion plan that aims at giving it a presence in the Kenyan capital Nairobi for the first time.

On the banking front, CBA — which the Kenyattas own alongside about 30 other investors — has cemented its position in the retail sector with the launch of M-Shwari, a mobile-based savings and loan product.

This product has helped the lender, which has traditionally targeted corporate bodies and high net worth individuals, crack the retail segment where its top-tier peers are reaping big.

In the past two years, the lender has expanded the product to all its regional subsidiaries, amassing 26 million customers, 70 per cent of whom are Kenyan, in the process.

The latest launch was in February where it partnered with MTN.

The lender also plans to extend the service to the Ivory Coast. CBA approves between 80,000 and 100,000 loan applications per day on M-Shwari.

Each transaction averages Sh3,400, highlighting the success that the five-year-old product has enjoyed.

Core Business

The lender, however, has been keen to grow its core business, with one of its strategies being to have a presence where its Kenyan corporate customers have operations in the region.

Isaac Awuondo, CBA Group’s managing director, has previously stated that the lender plans to set up shop in all Eastern African nations, with branches in South Sudan, Rwanda and Burundi.

The bank has also said it is targeting Mozambique, DRC and Ethiopia through an online presence. CBA has two branches in Uganda, 11 in Tanzania and 33 in Kenya.

Regional expansion is becoming important as the East Africa Community (EAC) common market continues to take shape, opening the way for free movement of factors of production in a market of over 130 million people.

Kenyan companies are racing to open subsidiaries in the neighbouring countries with banks following suit.

In Rwanda, CBA is looking to join the likes of KCB Group, Equity Bank, I&M Bank which have already established a presence as part of their regional expansion programme. Rwanda has 17 commercial banks.

The latest surge in the Kenyatta family empire is seen as a sign of its rising confidence in the national and regional economies.

The recent and ongoing investments by the Kenyattas are the most visible activities of an empire whose operations have been out of the public domain for the past three decades.

Business Daily, Kenya

No comments:

Post a Comment