West Africa’s financial giants, Ecobank Group, have made a formal entry into the Kenyan financial market with the purchase of a 75 per c e nt stake in local finance institution, the East Africa Building Society (EABS), b ank executives said here Wednesday.
Ecobank Group Chief Executive Arnold Ekpe announced the purchase of the 75 per c ent stake in EABS, which has been operating as a bank in Kenya since 1959, sayi n g the buyout would enable the West African banker to gain inroads into the Kenya n market.
In one of the greatest attempts at Africa’s financial and economic integration, Ecobank says its entry into the Kenyan market would signal more competition, tho u gh friendly.
Ecobank has a branch network covering 22 African countries with its main operati ons in Ghana, Nigeria, Liberia and the Central Africa Republic.
The buyout of the EABS, a family bank founded by prominent businessman Lalit Pan dit, who bequeathed it to his sons upon his death, will enable the Ecobank to ac c ess a growing economy in Kenya, with high chances of business growth.
Ecobank is eyeing Kenya’s largely under-utilised merchant banking business, whic h could rapidly revolutionise the dormant agricultural sector in the East Africa n nation, still struggling to emerge from the shadows of this year’s post-electio n political disturbances.
Kenya slipped into two months of straight chaos after its December presidential polls failed to identify a clear winner of the presidential race, leading to int e r-tribe animosity.
Ecobank is coming to East Africa’s largest economy, backed with a healthy capita l base that can finance its venture into its maturity.
Little information is available on how much has been paid for the 75 per cent st ake in EABS, whose ownership is partly associated with an influential political f amily in East Africa.
Ekpe said the initial approach to business would be to brand the new outfit in K enya, improve its competitiveness in banking industry, with close to 50 banks in
operation, but dominated by mainly foreign multinationals.
EABS first quarter financial results show the bank made a paltry Ksh31.5 million after tax profit, up from Ksh10 million it returned in 2007.
“There are various aspects of the business we intend to address to bring it back to the Ecobank standards,” Ekpe told the Daily Nation’s Smart Company, a weekly .
Ecobank Transnational Inc boasts of a US$ 2.7 billion capital base, with one of the widest footprints across Africa than any other bank so far.
Ekpe said the bank was still awaiting a formal gazettement of its acquisition of the EABS before it begins to formally transact businesses in Kenya.
EABS has been concentrating in mortgage finance but the new buyer is hoping to e xpand its branch network in order to compete on the same footing with the more d o minant players.