Friday, June 2, 2023
BusinessKCB Group considers buying stake from Ethiopian bank

KCB Group considers buying stake from Ethiopian bank

The top Kenyan bank, KCB Group, is looking at options to buy shares from one of the commercial banks in Ethiopia.

The Group, headquartered in Kenya, is known for acquiring banks across East Africa with little interest in establishing a banking operation from the inception in order to avoid losses incurred upon entry.

By the end of last year, the Kenyan lender had finalized the acquisition of Trust Merchant Bank (TMB) in the Democratic Republic of the Congo (DRC) for a sum estimated to be more than USD 110 million.

- Advertisement -

In 2021, the bank acquired Bank Populaire du Rwanda (BPR), Rwanda’s second-largest bank, from Atlas Mara Mauritius Ltd. and Arise B.V. KCB now has a presence in eight countries, including Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, and the DRC. It already has a representative office in Addis Ababa.

Sources at the Bank told The Reporter that KCB has already decided to buy equity from local banks in Ethiopia instead of opening a branch or subsidiary.

“The Bank management thinks opening a branch or subsidiary would be risky and may cause a loss,” said the source, adding that KCB is likely to buy shares from one of the biggest banks in Ethiopia.

In an interview with Business Daily Africa, Finance Director Lawrence Kimathi stated that the bank is in the process of shortlisting banks with which it will partner.

“We have scanned the market in Ethiopia. I have had meetings with a number of banks, and we have shortlisted banks that fit our strategic profile,” remarked Kimathi.

Kimathi stated that technological progress is one of the criteria used to shortlist banks.

“We’re looking at a bank that is tech-savvy,” said the Finance Director.

The recently adopted government’s banking policy permits local banks to sell up to 30 percent of their stake to foreign banks, with an additional five percent for any non-bank foreign investor.

“The regulation only allows us to be a minority shareholder,” Kimathi added. “Thus, chemistry is really important with the partner bank in Ethiopia.”

Profit after tax for the KCB Group increased by 19.5 percent from 2021 to 2022, reaching Ksh40.8 billion (USD 308 million).

“We’re comfortable with a couple of banks that fit our strategic profile,” underscored Kimathhi.

There are more than 30 commercial banks in Ethiopia at the moment. Before the end of last year, Awash, Bank of Abyssinia, Dashen, and Cooperative Bank of Oromia were the market leaders in terms of profit, capital, and resource mobilization among private banks.

The state giant, Commercial Bank of Ethiopia (CBE), is still the major player in the industry, accounting for more than a third of the profit.

- Advertisement -



More like this

Wegagen Bank aims high with new 1b bln br building in Tigray’s Capital

Wegagen Bank has announced plans to construct a new...

UNOPS, Italy team up to give Ethiopian communities helping hand worth €7.6 Million

The United Nations Office for Project Services (UNOPS) and...

Eritrea’s President departs for Moscow to meet Putin after China visit

Eritrean President Isaias Afewerki departed from Asmara this morning...

Mass protests erupt over mosque demolitions

- Two deaths were reported   - Thirty-seven police personnel...