Ecobank Kenya is taking steps to purchase an undisclosed local investment bank as part of plans to facilitate Ecobank involvement in oil, gas and energy deals.
According to chief executive officer of Ecobank Anthony Okpanachi, the bank hopes to launch an investment banking branch to maximise on the rising potential of the oil and mining sectors in Kenya and the East Africa region, reports Business Daily.
In order to launch the financing segment of regional operations, the bank has chosen to acquire an existing local bank, the CEO revealed to Business Daily.
“Instead of getting the licence as a start-up we will use the approach of acquiring an already operational bank,” Okpanachi said.
While Ecobank currently has a minor structured finance department comprising two people, this department will be integrated in to the newly acquired investment bank which will hire a total of 15 staff members to further the financing push that the company hopes will see Ecobank reap the benefits of increasing numbers of oil, gas and other energy projects across Kenya and the East Africa region.
With negotiations still on-going, Ecobank will not be revealing the local bank being targeted, nor the details of the potential acquisition until the deal has been finalised; with completion of the acquisition expected for the first half of 2013, with investment operations due to start by the end of next year.
Since Ecobank’s entry on to the Kenyan market in 2008, the bank has not been successful hindered by intense competition from local banks, coupled with the bank feeling the consequences of rapid expansion racking up significant investment costs. This year Ecobank reported a pre-tax loss of 900 million Kenyan Shillings ($10.5 million) in the nine months to end September.
However, with operations in 32 countries across Africa – East Africa currently only accounting for 3 percent of total Ecobank group revenues – the banking group may still have the chance to gain on the East African market if it plans out a successful strategy going forward, as such the current local investment arm acquisition deal may be pivotal to Ecobank Kenya’s fate.