Kenya’s Co-operative Bank has made it first investment outside the country, taking up a 51 percent stake in its South Sudan subsidiary with the South Sudan Government holding the remaining 49 percent stake.
The deal which was revealed by the banks Managing Director Gideon Muriuki entails a greenfield joint venture worth 1.2 billion shillings ($15 million) with the government of South Sudan.
The bank plans to open five branches in the capital Juba by December.
The Co-operative Bank becomes the fourth Kenyan bank to venture into South Sudan where subsidiaries of other banks have posted impressive results.
Just last month, CFC Stanbic Bank announced it had set shop in South Sudan joining the Kenya Commercial Bank (KCB) and Equity Bank, which have seen their South Sudan subsidiaries emerge the best performing in the region.
According to data from the Central Bank of Kenya (CBK) South Sudan accounted for 42 percent of the 2.3 billion shillings ($27,390,734 ) profit that Kenyan banks with regional shops posted in 2011.
“The majority stake gives us control of the subsidiary and we will be responsible for the management of the bank,” said Muriuki.
The government of South Sudan will hold the stake in trust for three years after which it will hand over the stake to the co-operative movement which is being developed in South Sudan.
The Co-operative Bank which has under its umbrella over 10,000 co-operative societies with eight million customers hopes to replicate its strategy of working with co-operative societies in South Sudan.
The bank seeks to play a central role in the co-operative movement in the region by providing relevant and innovative financial services. The Co-operative Bank will use South Sudan as a case study to guide its planned expansion into Tanzania, Rwanda and Uganda.
The bank posted 4 billion shillings ($447 million ) in pretax profits in the six months to June 2012 up from 3.3 billion shillings ($39 million ) in the previous year, marking a 21.7 percent jump.
The banks loan book grew by 18.3 percent to stand at 112.6 billion shillings up from 95.1 billion shillings the previous year.
Muriuki attributed the results to increased lending and higher net interest margins.
Image via In2EastAfrica