South Africa’s FirstRand plans Kenya bank acquisition

South Africa’s FirstRand Bank plans to acquire a mid-sized Kenyan bank when the opportunity arises to boost its presence in the largest economy in one of the fastest-growing regions on the continent, its Africa head said.Foreign lenders have been looking to set up operations in Kenya, driven by a desire for a piece of the action in a market where collective industry profits jumped 20.4 percent last year to 89.3 billion shillings ($1.07 billion).Jabu Khethe, chief executive for FirstRand Africa, said the sector was very competitive, with 43 lenders, making it difficult for a new entrant to adopt a greenfield model.A law requiring banks to raise their minimum capital to 1 billion shillings from 250 million shillings by the end of this year, would also throw up consolidation and acquisition opportunities, Khethe said.“We tend to come in the mid-tier type level. It is easy to merge the cultures, people, systems, etc,” Khethe said at the launch of the bank’s representative office in Nairobi late on Wednesday.“More importantly you still have some work to do in capturing the market share. To buy a bank that is dominant already is not always the best solution.” The representative office will initially deal in infrastructure deals, project financing and pave the way for the acquisition that would eventually allow FirstRand to roll out its full spectrum of services, including retail banking.It will also allow the bank to make a play for the Africa-India trade corridor, which is growing fast due to demand for products and services on both sides, Khethe said.The $19.4 billion lender launched operations in India this year, becoming the first African bank to start retail banking in the Asian country.FirstRand, which is the second-largest bank in South Africa by market value, plans to increase its branches in Tanzania, where it established a subsidiary 18 months ago, he said.“We have an intention to build up that infrastructure to the basic level required, which is somewhere in the region of 25 or 30 branches,” Khethe said, adding that the eventual aim was to start operations in Uganda and Rwanda as well.FirstRand’s business on the continent outside South Africa, which is mainly concentrated in southern Africa in countries such as Mozambique and Zambia, contributes less than 10 percent to the group’s income, Khethe said.But it is growing at a fast rate, prompting the bank to plan entry into Ghana and Nigeria in the west of the continent.“There is a two-prong approach in Nigeria where we already have a representative office and also we are in the space of looking for an acquisition. The Ghana situation is also an acquisition,” he said.

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South Africa’s FirstRand plans Kenya bank acquisition