Kenya Welcomes Bank Of China To Set Shop In Kenya
Kenya has allowed financial behemoth, Bank of China (BOC), to set shop in the east African nation, according to an official statement seen by the area 254.com, intensifying reports that state is keen to spin off its shares in Kenya Commercial Bank Group (KCB), the biggest financial institution in the east African nation.>>>
Central Bank of Kenya (CBK) said in the statement that the Banking Act effectively "makes Bank of China Limited the fifth foreign bank to be authorized by the Central Bank to establish a Representative Office in Kenya." BoC is the only bank in the communist nation to operate more than 100 years.
"Through the Representative Office in Kenya, Bank of China Ltd seeks to explore potential business opportunities in the country with a view to evaluating the prospects of a long-term presence in Kenya and the wider East African region," it added.
The BOC, substantially owned by a Chinese Sovereign Wealth Fund, is one of the four largest banks in China, supporting hundreds of international projects. Headquartered in Beijing, it operates both in China and internationally, including in South Africa and Zambia. BOC is primarily engaged in providing corporate and personal banking, investment banking, treasury and asset financing services.
Sources indicated that a Chinese bank has expressed interest in buying the government stake in KCB, the largest financial institution, and it was likely the BOC could be the right candidate.
We can also reveal that the Standard Bank of South Africa, which recently shut its subsidiaries in the Latin America, has been keen to expand into the regional market and its board, it is reported, to have has been scrutinizing KBC books. Recently, KCB e-organized its top management, setting reports that the government was keen to spin off its shares in the regional behemoth. "Standard Bank is keen to get KCB," the source explained. CFC-Stanbic is the local subsidiary of the Standard Bank.
"Kenya continues to attract growing international interest from renowned international financial institutions as a preferred base for their regional operations. This presents unique opportunities for the Kenyan economy to be part of increasingly global financial markets.
"With more foreign institutions choosing Kenya as their regional base, the country draws closer to realizing its aspirations of being a regional financial hub as envisaged under the Government’s economic blueprint, Vision 2030. The Central Bank will continue to support the Government towards the ultimate realization of this goal," CBK said in the statement.
KCB was founded in 1896 when its National Bank of India opened an outlet in Mombasa and has then expanded to be biggest regional bank, with branches in the East African Community countries including South Sudan.
The Kenyan government fully owned the bank in the 1970s, but has gradually reduced the share to 17.74 percent. It has at least 222 branches across the region, making it the biggest financial institution in east and central Africa.
BOC Board members have made overseas business a strategic priority, so the lender will continue to increase its number of branches worldwide while prudently considering acquisitions. In the first half of 2011 alone BOC established more than 20 new foreign branches.
By the end of last year, BOC had 586 overseas outlets in 32 countries, as well as Hong Kong, Macao and Taiwan, with 21,100 employees. Before the founding of the People's Republic of China in 1949, Bank of China had 34 branches in 14 countries or regions after establishing its first overseas branch - also the first by any Chinese financial institution - in London in 1929.
To extend its network overseas, the bank has also used agent banks. In 1929, the bank has 17 agent banks in the United Kingdom and the United States. As China opened up, agency relationships were developed around the world. Initially concentrated in Western Europe and Southeast Asia, the bank went on to forge ties with 1,500 agent banks in more than 180 countries and regions by the end of 2011.
Last November, BOC was selected as a global systematically important financial institution by the Financial Stability Board, becoming the first commercial lender from an emerging market to join the "too big to fail" club.
In December, the rating agency Standard & Poor's raised BOC's rating from A-minus to A, citing the "very high likelihood of extraordinary government support" in the event of financial distress.The bank also has competitive advantages in international clearing and settlement services that facilitate Chinese business expansion overseas.