Guaranty Trust Bank Plc, Nigeria’s largest lender by market value, told news service Bloomberg it will open units in Kenya, Tanzania and Uganda as it seeks to expand into East Africa.
The bank will “acquire lenders that are not that large, but profitable in those countries in the short term,” Segun Agbaje, the CEO of the bank told Bloomberg.
Guaranty is set to join a growing list of West African banks to enter Kenya, including Togo-based Ecobank that acquired the East African Building Society in 2008 and United Bank for Africa (UBA), which started its Kenyan operations from scratch in 2009.
West African banks —which are relatively large in size — have been attracted to East Africa where high economic growth and a large unbanked population provide more growth opportunities.
Mr Agbaje said the bank is targeting the regional markets due to their “appreciable gross domestic product, growing investments and ease of doing business.”
Guaranty specialises in corporate banking. The Nigerian multinational had an asset base worth of $11 billion in the year ended December, with its cash and cash equivalent standing at $2.06 billion. This compares with KCB, which is Kenya’s largest bank with assets worth $4.3 billion.
|Nigeria's United Bank of Africa already operates in Kenya. FILE PHOTO|
Guaranty made a net profit of $556 million from its operations in Nigeria, Cote d’Ivoire, Gambia, Ghana, Liberia, Sierra Leone and the UK.
The Nigerian bank is likely to target one of Kenya’s small to medium-sized banks that is profitable and has a significant customer base, giving it an easier entry in the highly competitive sector.
Acquiring an existing bank is seen as a way of avoiding the high cost of customer acquisition and raising deposits from a new operation.
It also eliminates the regulatory burdens associated with a new banking operation, including acquisition of a licence.
UBA is still making losses since its entry in late 2009. Ecobank made an $11.8 million loss in the year ended December reversing its profit momentum that started in 2009.
The losses have been driven by difficulty in raising large retail deposits.
Source: Africa Review
Source: Africa Review