East Africa: Egyptian Bank Enters Region Through Kenya

Commercial International Bank (CIB), Egypt's largest private sector lender by assets, is targeting more buyouts in East Africa after completing acquisition of Kenya's Mayfair Bank Ltd (MBL).

CIB is listed on both the Egyptian and London stock exchanges, and boasts an asset base in excess of $24 billion.

The Egyptian lender acquired a majority stake (51 per cent) in Kenya's Mayfair Bank by way of a $35 million capital injection.

On April 24, Kenya's Central Bank announced the conclusion of the CIB-Mayfair deal, having approved the transaction on April 7.

MBL, which was licensed in June 2017, is classified by the regulator as a small bank with a market share of 0.17 per cent. It mainly serves high net worth individuals and corporate customers.

The Egyptian lender focuses on individuals, small and medium enterprises (SMEs), institutions and corporates.

"The Mayfair Bank-CIB partnership is expected to benefit customers and broaden trade between Kenya and Egypt," says Mayfair chairman Anjay Patel in a statement.

He adds that the injected funds will be added to the bank's capital base, and that all existing shareholders will continue in the institution.

CIB says it is attracted by East Africa's openness to trade, increased adoption of digital banking, increased level of financial inclusion and the relatively stable political environment.

"CIB management concluded that Africa -- specifically East African countries -- being a natural geographic extension to Egypt, presents lucrative growth opportunities for CIB," chairman and chief executive, Hisham Ezz Al-Arab, says in the lender's latest annual report.

The lender foresees rapid economic growth across the continent, and is positioning itself to tap into the most promising markets.

"My frequent visits to other African nations have left me impressed with the talent of today's youth and their fluency in deploying technology to capture opportunities that eluded their predecessors less than a generation ago. From Kenya to Uganda, Egypt to South Africa, top applications and tech platforms tend to be home-grown, not imported. It is a development that gives me heart," Mr Al-Arab says in the statement.

KEY MARKET

The English-speaking region is also a key market for Egypt-based products in several sectors.

"East African countries are part of the African Continental Free Trade Area, which is expected to allow the free movement of business travellers and investments, create a continental Customs union to streamline trade, and attract long-term investment in Africa," adds the CIB head.

The lender will trade in Kenya as Mayfair CIB Bank Ltd.

CIB, which was licensed by the Central Bank of Egypt in 1975, currently has representative offices in the UAE and Ethiopia.

"Additionally, these countries have a successful record of accomplishments in digital banking and financial inclusion, which offers CIB an unmatched learning opportunity in these arenas. 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."

In Ethiopia, the bank established a representative office in Addis Ababa in April 2019, and has been fully operational since July 19, 2019. Last November, CIB made clear its intention to acquire a stake in a Kenyan bank.

"Our growth into Africa is part of a story of Africans reclaiming control of their financial apparatus. At the beginning of 2019, CIB had 10 correspondent banks in Africa; when we wanted to work with any other party, we typically did so through a European intermediary. Today, we cover 18 African countries through a diverse network of correspondent relationships with 24 African banks as well pan African banking institutions," said Mr Al-Arab

"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."

CIB has one fully-owned subsidiary, CVentures, and two associates, Falcon Group and Fawry Plus, in which it owns stakes of 32.5 per cent and 23.5 per cent, respectively. The Egyptian lender serves an expansive network of retail customers, high-net-worth individuals, enterprises and institutions that drive the Egyptian economy.

The bank has a network of 207 branches and banking units and a workforce of 6,900 providing tailored services to clients in the corporate, commercial, retail, wealth, and SMEs.

CIB is the first Egyptian bank to establish a presence in Kenya and anchors the institution's expansion plans into East Africa.

Last year, Nigeria's largest retail banking group Access Bank Plc announced plans to expand its foothold in the region through acquisitions and greenfield options.

Access Bank, which controls over $13 billion worth of assets and over 27 million customers, is eying the regional banking market as part of its five-year plan (2018-2022) that seeks to shore up its retail and wholesale banking business and position the institution as the world's most respected African bank.

The Nigerian lender, which already has a presence in Rwanda, is in the process of acquiring 93.57 per cent shareholding in Kenya's privately owned Transnational Bank at an undisclosed fee, while also keeping an eye on Tanzania and Uganda.

Access Bank's deputy managing director Roosevelt Ogbonna said Kenya is one of several markets that the bank is seeking to enter as part of its pan- African expansion plan.

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