Access Bank Plc, Nigeria's largest retail lender, has acquired Kenya's Transnational Bank, kick-starting its plans to open shop in all major Eastern Africa markets.
The bank, which already has a presence in Rwanda, says it is seeking to expand in the region through acquisitions and setting up of greenfield operations, in a move that is set to deepen competition for customers with local rivals.
Access Bank, which controls over $13 billion worth of assets and over 27 million customers, has drawn a five-year plan (2018-2022) that seeks to shore up its retail and wholesale banking business and position it as "the world's most respected African bank."
The Nigeria Stock Exchange (NSE)-listed lender is also eyeing East Africa's nascent oil and gas sectors, counting on it its track record in financing upstream and downstream fuel projects.
Access Bank Group's Deputy Managing Director Roosevelt Ogbonna in an interview with CNBC Africa last week said Kenya is just one of several markets that the bank is seeking to enter as part of its Pan-African expansion plan.
"As you all know Kenya has significant market share within the East African corridor and that is why we are going there. I think the idea is really not just about Kenya. As part of our five-year strategy we expect to be Africa's gateway to the world and to drive international and global collaborations and that is what you see playing out with Kenya," said Mr Ogbonna.
"If we are going to be Africa's gateway to the world supporting intra-Africa as well as inter-Africa trade we have to be in Key markets within Africa and within the global space as well. And so Kenya is just one of the many key markets in Africa where we are seeking to take opportunity."
The bank is looking for more acquisitions across Africa while also planning to set up its own banking infrastructure in other markets.
"As we spread and look at opportunities across Africa, some might be greenfield others might be emanating opportunities that we see we could take advantage of," said Mr Ogbonna.
Access Bank's increased focus on retail banking comes as a survey conducted by McKinsey & Company last year (2018) showed that the retail market --people earning less than $417 per month--will be the driving force of African banks from 2017 to 2022, and expensive banks will be rejected by these customers.
The survey also revealed that retail customers are extremely sensitive to prices of financial products and are also keen to select banks that offer them convenience in terms of accessing financial products and services.
It is estimated that Africa's banking revenues will grow by 8.5 per cent per annum from 2017, bringing the continent's total banking revenues to $129 billion in 2022, of which $53 billion will be from retail banking.
Over half of the retail banking customers sampled, however, singled out pricing as their primary reason for selecting a bank, followed by convenience in terms of quality of services and proximity of the bank to customers.
Access Bank recorded 44 per cent growth in net profit to $250 million in nine months to September 30 this year, buoyed by growth in its retail and wholesale banking business.
The lender, is in the process of acquiring 93.57 per cent shareholding in Kenya's privately-owned small sized lender Transnational Bank at undisclosed fee, with its eyes further cast on Tanzania and Uganda.
The Kenyan transaction is expected to be concluded in the next 30 to 60 days' subject to regulatory approvals.
Other Nigerian banks operating in Kenya include United Bank of Africa (UBA) and Guaranty Trust Bank (GT Bank) which acquired 70 per cent shareholding in Fina Bank Group in 2013.
The East African banking market is currently dominated by Kenya's two-largest retail banks, KCB and Equity, with the recently concluded merger between NIC Bank and Commercial Bank of Africa (CBA) creating the third-largest lender in the region.
Access Bank expects to undertake trade financing through its UK office, leverage on its digital capacity and capabilities to create connections between customers and markets across Africa and to provide a platform called 'Access Africa' that allows both person-to-person as well as business-to-business transactions.
The lender currently has over 10 million mobile customers who can start and terminate transactions through mobile phones in 19 African countries.
Access Bank also has a presence in Rwanda, Ghana, Gambia, Sierra Leone, Democratic Republic of Congo (DRC), Zambia and the United Kingdom, with representative offices in Lebanon, India and China.