After becoming the first Egyptian bank to establish a presence in Kenya following last month’s acquisition of Mayfair Bank Ltd, Commercial International Bank (CIB) has said it is targeting more of such buyouts in an expansion drive across East Africa.
CIB is Egypt’s largest private sector lender by assets with an asset base of over $24 billion. The Egyptian lender, listed on both the Egyptian and London stock exchanges, has a network of 207 branches and banking units. With a workforce of 6,900, it serves a network of high-net-worth individuals, enterprises, institutions, and corporates that drive the North African economy.
Its acquisition of a 51 percent stake in the Kenyan lender, a “small bank” that mainly serves high net worth individuals and corporate customers, was approved by Kenya’s Central Bank in early April. The buyout was in the form of a $35 million capital injection, which will be added to Mayfair’s capital base, according to chairman Anjay Patel.
For CIB, the entry into Kenya, widely considered East Africa’s financial hub, represents another giant leap in its expansion bid into the region. The bank last April established a representative office in Addis Ababa, Ethiopia, which has been fully operational since July.
The attraction to East Africa is based on the region’s openness to trade, increased adoption of digital banking, high level of financial inclusion, and the relatively stable political environment, CIB says.
In the company’s latest annual report, chairman and chief executive, Hisham Ezz Al-Arab, notes that the bank’s management agreed that East African countries, being a natural geographic extension to Egypt, presents lucrative growth opportunities for CIB.
“East African countries are part of the African Continental Free Trade Area… (and) have a successful record of accomplishments in digital banking and financial inclusion. As a result, CIB management has carefully studied several opportunities during the past three years in order to choose the best fit for its expansion strategy,” the bank chief added.
The Mayfair Bank-CIB partnership is expected to “benefit customers and broaden trade between Kenya and Egypt,” Mayfair’s Patel said. Generally, the region is a key market for Egypt-based products in several sectors.
“In Kenya, we will offer back-to-back trade finance, facilitating Egyptian exports to (and imports from) this vital East African market, while we look forward to exploring the exciting Ethiopian market as it embarks on a period of political and economic reform,” Al-Arab said in November when disclosing CIB’s intention to buy a stake in a Kenyan bank.
More so, the latest transaction adds to the growing list of mergers and acquisitions in Kenya’s financial services industry, involving the consolidation of local banks as well as buyouts of lenders by foreign players. Nigeria-based Access Bank Plc early this year completed the acquisition of 93.57 percent shareholding in Kenya’s privately owned Transnational Bank at an undisclosed fee.
CIB will trade in Kenya as Mayfair CIB Bank Ltd while all existing shareholders are expected to continue in the institution. In addition to the new Kenyan unit and the representative office in Ethiopia, Commercial International Bank, licensed by the Central Bank of Egypt in 1975, currently has a presence in the United Arab Emirates.
