Standard Bank Group Limited, Africa’s biggest bank by assets, is planning to acquire a bank in Kenya by 2025 as part of its growth strategy.
The plan of the acquisition was disclosed by the company’s East Africa Regional Chief Executive Patrick Mweheire.
Nairametrics gathered from the Bloomberg report that the plan is for its Kenyan unit, Stanbic Holdings Plc, to grow through acquisition within two years,
Top three banks: Mweheire said in an interview in the capital, Nairobi. Standard Bank wants to use the purchase to become one of the largest operations in a market dominated by local brands such as Equity Group Holdings Plc and KCB Group Plc.
- “We have aspirations to be a top three bank in Kenya,” Mweheire said. “Number six is not acceptable. Within 12 months we would have identified and would have started having negotiations with someone,” he said.
Operations in East Africa: Johannesburg-based Standard Bank has operations in five eastern African markets, including Kenya, Uganda, Tanzania as well as the Democratic Republic of Congo where it plans to add retail banking to its corporate business. It has a representative office in Ethiopia.
- “The firm will also seek a full license in Ethiopia once Africa’s second-most populous nation opens up its banking industry to foreign investors. It would have to buy something because organic growth doesn’t make sense. The problem with going organic is that you bleed for the first five to 10 years.”
Narametrics also gathered that Ethiopia plans to allow overseas lenders to acquire up to 30% of its commercial banks, the latest step by the government to encourage investment in one of Africa’s biggest economies.
A draft by Ethiopia’s Council of Ministers circulated to domestic lenders seen by Bloomberg stipulates the amount of equity that foreigners can purchase. It comes after the government announced plans to ease restrictions on bank ownership, and fulfils a pledge by Prime Minister Abiy Ahmed when he came to power in 2018 to open up the economy to foreign investors.
25 commercial lenders are serving Ethiopia’s 117 million people, according to World Bank data. The state-owned Commercial Bank of Ethiopia holds assets worth 948.1 billion birrs ($17.6 billion) and has about 15.9 million customers, according to information on its website.
- “I wouldn’t be surprised if they ask for $100 million to $200 million of capital to get anything done there,” Mweheire said, without giving further details.
The bank’s scorecard: Stanbic Holdings, which is 75% owned by Standard Bank, reported a 26% jump in full-year net income in 2022 from the previous period, with investment in government securities climbing 41% to 83.6 billion shillings (647 million) as it took advantage of rising interest rates.
- “We expect the bank’s aggressive lending strategy to continue,” Nairobi-based Sterling Capital said in an emailed note.”
