Kenya's I&M Bank has acquired a majority stake in CF Union Bank (CFUB) of Tanzania.

According to a CFUB statement yesterday, the commercial bank has been operating in Tanzania since 2002 and has two branches -- in Dar es Salaam and one in Arusha. It has 57 members of staff.

It had a balance sheet size of Sh80 billion as of December last year.

Following the buyout of the existing shareholders of CFUB, the new board has taken over under the chairmanship of Mr Sarit Raja Shah, the executive director of I&M Bank.

The acquisition of CFUB is the second international footprint of I&M Bank after it took a 50 per cent stake in Bank One Mauritius in 2008.

It became the only Kenyan group to have a banking presence in the country, which is a regional financial hub.

"This strategic move is another key milestone for I & M and expansion into Tanzania and will enable our existing corporate customers, who already have a presence there, to avail of an integrated cross-border banking relationship," the statement quoted I&M Bank chief executive officer Arun Mathur as saying.

"It could also influence other corporate customers who require cross-border financial structures as well as those who have extensive trade dealings within the region to move to us since we now have a presence in Tanzania. Trade between the two countries is increasing steadily and our entry into Tanzania will create further opportunities to customers in both countries."

Mr Shah noted that the acquisition had made their bank truly regional, and with an insurance company, GA Insurance Company as part of I&M Group, they could help customers to accelerate their growth.

He pointed out that the acquisition was an important step for I&M Bank's evolution into a multinational bank.

I&M Bank would continue to explore such expansion opportunities in other countries in the region.

The bank has13 branches in Kenya and a significant investment in the payment cards business.

I&M Bank has since its conversion to a full-fledged commercial bank in 1996 followed a sustained expansion policy which has seen its balance sheet size expand by more than five times since 2000 to Ksh45 billion at present.

It has also leveraged on this investment by acquiring the ability to offer specially structure offshore financial services to its customers.

Proparco, the French Development Agency, with DEG - the German Investment & Development Company recently increased their shareholding through an additional investment of $17 million in I&M Bank. With the additional equity investment, the two organisations now hold a 21.7 per cent shareholding in the bank.

The bank's paid-up share capital rose to Ksh2.6 billion while the aggregate shareholders funds increased to Ksh7.3 billion.