Standard Bank consolidates its East African presence with official opening of Ethiopian representative office

Standard Bank Group operating as CfC Stanbic Bank in Kenya has expanded its already extensive East African footprint with the official opening of a representative office in Ethiopia. This means that Standard Bank, which is Africa’s largest bank by assets, has a continent-wide footprint in 20 African countries.

The representative office, which is based in Addis Ababa, was opened by Standard Bank Chief Executive, Ben Kruger. It will act as an entry point for clients seeking to invest in Ethiopia and will be administered by Standard Bank’s head office in South Africa

The growth potential for the East African region continues to attract significant investment. With an established presence across four of the key markets in the region, namely Kenya, South Sudan, Tanzania and Uganda, the opening of the Ethiopian representative office is indicative of the group’s commitment to the region.

“As a bank rooted in Africa, our vision is to build a leading financial institution that delivers superior products and services for all our customers. We are able to leverage our strong position on the continent, our strategic partnership with the Industrial and Commercial Bank of China (ICBC), and our sector expertise in natural resources, to facilitate capital investment in support of growth and to connect African markets to each other,” says Mr. Kruger.

Ethiopia’s remarkable growth has been underpinned by high public investment and a growing consumer base. The country boasts the second largest population on the continent, behind Nigeria, at around 90 million. GDP growth has averaged about 10.0% over the past 5 years. Heavy public investment in agriculture, energy and transport are likely to continue to support growth in the medium term as the government ramps up its productive sectors.

The energy sector is also set to boom with power projects at various stages of development, and with Ethiopia emerging as a major power hub in the region, energy exports will likely become a major foreign exchange earner in the near future. Industry and manufacturing, a top priority for Ethiopia, are likely to start making a more significant contribution in the country’s GDP going forward which will largely be facilitated by the increase electricity supply.

“As such, establishing a presence in Ethiopia is in recognition of the increasing interest by investors and our clients, in the country’s economic growth. Standard Bank will be well-positioned to take advantage of the cross-sectorial investment opportunities both in Ethiopia and the region as a whole.  Our experience in East African markets will benefit all our clients by providing them with insights into how best to capitalise on their investments in the region,” said Mr Kruger.

 “We believe that we are uniquely positioned to support the government’s plans in attracting more investments into the country through our client base on the continent and facilitating the financing on their behalf,” said Ms Taitu Wondwosen, Head of Coverage Ethiopia.

CfC Stanbic Bank bond oversubscribed by 27pc

CfC Stanbic Bank’s KES 4bn subordinated and unsecured Tier II fixed rate bond has been oversubscribed by 27pc.

This was the first tranche of the Bank’s KES 5bn multi-currency medium term note programme which also allows for the issue of credit-linked notes.

The 7-year bond jointly arranged by the CfC Stanbic Bank and SBG Securities raised KES 5.08bn with fund managers taking 88pc of the notes. Insurance companies and retail investors received 9pc and 3pc respectively. 

“The proceeds of the issue will be applied by the issuer for general corporate purposes and future growth,” CfC Stanbic indicated in its information memorandum last year.
CfC Stanbic Bank Chief Executive Greg Brackenridge said the success of the bond demonstrates a robust investor appetite for bonds and the strong faith investors have in the bank. 

Mr. Brackenridge said that the bank will continue to make gains in providing longer term loans to both personal and business customers, adding that the bond will better match the average tenor of the bank’s funding with the average tenor of customer loans and advances. 

The bond, priced at a fixed coupon rate of 12.95pc, also qualifies as Tier II capital further strengthening the bank’s already sound total capital position. Interest will be paid semi-annually in June and December each year starting in June 2015. 

With three previous bonds, the financier is one of the more prolific corporate debt issuers on the Kenyan market, with this being the Bank’s largest ever single bond issue to date.

CBA’s group eyes accelerated growth

CEO Issac Awuondo: CBA will use the capital to facilitate the bank's geographic expansion within the region

Kenya’s largest privately owned bank, CBA Group, has listed its maiden Medium Term Note today in the Nairobi Securities Exchange (Fixed Income Market Segment) in an official bell ringing ceremony.

In the First Tranche of the Medium Term Note issue, CBA raised KES 7Bn, which was an over-subscription by 40pc, to deem the program a remarkable success. As a result of the oversubscription, CBA exercised the green shoe option of KES 2Bn.

The bank’s plan was to raise Kes8 billion over a two-year period beginning with KES 5Bn as the First Tranche in November 26, 2014 and the remainder by the end of June 2015.

“Last year we embarked on a journey to this growth milestone with the launch of the Medium Term Note program in December 2014. I am happy to report the first tranche of the Medium Term Note Program was very successful. This is an affirmation of the soundness of our strategy by the investment community and is a step in the right direction for the bank. This capital injection is crucial to our regional expansion plans,” said CBA Group MD Isaac Awuondo during the bell ringing ceremony.

The Medium Term Note program was necessitated by CBA’s strategy to expand regionally into new markets, which requires significant amounts of funds, over and above new capital injections by shareholders.

“Our main aim for raising this capital was to facilitate our geographic expansion within the region. This vision is now a step away from being a reality. We will deliver on our promises and I want to thank investors for their support.” said Mr. Awuondo.

CBA’s key strategic objective is to acquire, maintain and grow market share, so as to become an integrated regional financial services provider. The bank therefore, intends to extend its presence in Kenya, Uganda and Tanzania in which it already has operations.

“The country’s vision 2030 agenda focuses on local and regional expansion, just like CBA. The Mombasa-Nairobi standard gauge railway, whose construction has started, is set to open up greater business opportunities within the region” said Desterio Oyatsi, CBA Board Chairman, during the bell ringing ceremony.

He went on to add: “This plays in to CBA’s vision of being a respected and significant financial services business partner in Africa. CBA believes in creating lasting partnerships that enhance economic growth.”

NSE Chairman, Eddy Njoroge reiterated these remarks by adding “We congratulate CBA and look forward to the day when the Bank and indeed the Group will list their shares on the Nairobi Securities Exchange. We urge firms in the banking and insurance sectors to follow the example of the Bank to also use the Capital Markets to enable them meet their regulatory obligations. As we consolidate our financial services regulators, listed firms particularly those whose services encompass insurance, Banking and other financial services should find it easier to comply."

The success of CBA Group is unmatched; first with its revolutionary mobile banking platform, M- Shwari in partnership with Safaricom Ltd and now the over-subscription of the First Tranche of its Medium Term Note program.