Pan-African financial institution, Ecobank says it plans to invest Sh8.8 billion ($100 million) in its Kenyan business over the next two years. This is expected to increase its strength locally and enable it compete favourably with rivals in the country.
The capital injection, according to the bank will come in instalments, with Sh2.2 billion ($25 million) already pumped into the business.
“We have strengthened management and injected $25 million of additional capital into Ecobank Kenya,” said Albert Essien, Ecobank Group chief executive officer.
The group CEO said the bank plans to further capitalise the Kenyan business in 2014 so as to make it a strong hub or Ecobank operations in the region.
The bank, which operates in over 30 African countries, has grown to become one of the largest financial institutions on the continent. Fortunes have dwindled in Kenya lately, with a loss of Sh881 million ($ posted in 2013, with rising operating expenses making its increasing net interest income insignificant.
Essien however said the new capital would help the bank expand and help Ecobank Kenya stay in compliance with Central Bank of Kenya (CBK)’s Sh1 billion minimum capital requirements. The investment will also help Kenya maintain its position as the hub for regional operations in East Africa.
Having commenced operations in Kenya in 2008, Ecobank is poised to grow its presence across East Africa by investing Sh22.44 billion ($150 million) as capital, even as it strengthens its Kenyan operations.
Although the bank has not decided how it intends to fund the investments, it has made it clear that funds would not be sourced from equities. Rather, the company intends to use non-dilutive funding, with focus on tier two capitals. “That could come from development finance institutions or other sources. We haven’t yet decided,” said Essien.
