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Mergers & Acquisitions

Egypt’s CIB Bank takes full ownership of Kenyan lender Mayfair

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A branch of Commercial International Bank (CIB) is pictured in Cairo, Egypt July 30, 2017. REUTERS/Mohamed Abd El Ghany
A branch of Commercial International Bank (CIB) is pictured in Cairo, Egypt July 30, 2017. REUTERS/Mohamed Abd El Ghany

Commercial International Bank (CIB) has secured approval from the Central Bank of Egypt (CBE) and the Central Bank of Kenya (CBK) to acquire the remaining 49% stake in Mayfair CIB.

The deal, valued at $40m, will see Mayfair CIB, a Kenya-based lender, become a wholly-owned subsidiary of CBE, which is based in Egypt.

In April 2020, CIB acquired a 51% stake in Mayfair Bank, which began operations in 2017, targeting  large and medium-sized firms and high-net-worth individuals.

“The acquisition will anchor CIB’s expansion into the East African region. Additionally, it will strengthen the trade and investment ties between Kenya and Egypt,” the Kenyan central bank said.

The new deal means the Egyptian lender has cumulatively spent $75.35 million (Sh9.38 billion) to acquire the Kenyan bank, which now trades as Mayfair CIB.

The bank has five branches in Nairobi, Eldoret and Mombasa and targets high-net-worth individuals and the corporate market segment. It is categorised as a small bank with a  market share of 0.26 percent as of December 2022.

It is  associated with politician Peter Kenneth, lawyer Ambrose Rachier and city tycoon Amos Gichuki Ngonjo and  accounted for only 0.26 percent of the country’s banking market at Ksh10.2 billion.

CIB has taken full ownership of Mayfair Bank after offering funds, skills and infrastructure to turn around the Kenyan lender from a loss of Ksh 379.2 million (US$ 3,044,560.40 )in 2020 to a profit of Ksh 357.5 million (US$ 2,870,333.18) in the nine months leading to  September.

Through the acquisition, CIB became the first Egypt-based lender to enter the Kenyan market and bets on using the operation as the launching pad to the East African market.

The deal was part of CIB’s strategy to expand into the East African region while bolstering trade and investment relations between Kenya and Egypt.

CIB CEO and managing director Hussein Abaza said: “We are pleased and grateful for this vote of confidence from the Governor and CBK as a whole as we are firm believers in the prospect of prosperity of the Kenyan economy and look forward to our contribution to the same.”

Mayfair CIB executive director Hossam Rageh said: “Kenya offers great opportunities, and we are excited to be part of the country’s business life and future. We will grow this bank as we continue to provide a first-class service to all our clients.”

According to CIB, the Kenyan lender reported a significant turnaround in its financial performance last year.

Mayfair CIB’s operating income rose 64% to Ksh 891.45m ($8.2m) in 2021 from Ksh 544.95m ($5.1m) in 2020.

Meanwhile, profits after tax reached KSH96.1m ($880,800) as opposed to a net loss of KSH379.3m ($3.6m) in 2020.

The Egyptian bank has indicated that its strategy for Mayfair CIB will hinge on trade finance activities and digital banking solutions, particularly growing the Egypt-Kenya trade corridor.

CIB, which is the top private bank in Egypt with an asset base of about $19.8 billion (Sh2.46 trillion), wants to support Egyptian large corporates and SMEs to do more business in the Eastern Africa hub.

“Kenya offers great opportunities, and we are excited to be part of the country’s business life and future. We will grow this bank as we continue to provide a first-class service to all our clients,” said Hossam Rageh, executive director at Mayfair CIB.

The Central Bank of Egypt licensed CIB on August 13, 1975.

 

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Mergers & Acquisitions

Standard Bank open to acquisitions in Nigeria, Kenya

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Bloomberg

Standard Bank is open to acquisitions in Nigeria and Kenya as Africa’s biggest lender by assets expands its presence in key markets on the continent.

The lender is also keen to bolster its businesses in Ethiopia — where it has a representative office — and its home-market South Africa, Standard Bank Chief Executive Officer Sim Tshabalala said. In Nigeria and Kenya, “if there was an appropriate priced asset with acceptable risk, we would definitely look at acquiring,” he said. Standard Bank paid US$400 million to take control of its Nigerian unit in 2007.

Expanding in the continent’s biggest economies is part of a strategy to ward off intensifying competition and tap African companies growing within the region. There’s also potential for enhanced business as the African Continental Free-Trade Area, the world’s largest regional trade arrangement by membership and population, slowly takes root.

“Unlike five to 10 years ago, there are a number of African multinationals, who have got regional strategies, as well as international multinationals who are operating in countries where we don’t operate in,” Tshabalala said in an interview in Bloomberg’s Johannesburg office. “They want us to provide them a service, which forces us to think outside the existing network,” such as in Ivory Coast, Morocco, and Egypt, he said.

In Nigeria, unit Stanbic IBTC Holdings Plc, which runs a corporate and investment bank, posted a 38 percent jump in profit in the six months to June 30, the biggest increase since 2018. Standard Bank wants the unit, which has 140 branches, to expand in Africa’s most-populous nation without hurting its “strong returns” in the country, Tshabalala said.

Ethiopia, Kenya

For similar reasons, Ethiopia, the continent’s second-largest country by population, offers a big opportunity, he said. Standard Bank is also planning to bolster its mid-sized business in the very competitive Kenyan market, according to the CEO.

Standard Bank’s earnings outlook has improved, and that “stronger backdrop allows the lender to focus on building exposure in higher-growth pan-African regions,” said Bloomberg Intelligence analyst Philip Richards. It has “excess capital, which can be put to use for acquisitions or investments to grow in external markets across Africa,” he said.

Still, companies have struggled with supply-chain disruptions and repatriating funds from Nigeria, which rations foreign exchange. Shoprite, Africa’s largest food retailer, sold its operation in the West African nation last year, joining other South African firms including Woolworths, Truworths and Mr Price to quit the country.

Nigeria’s economy has also recorded two recessions in the last six years and has been hit with soaring inflation that is at a 17-year high. Meanwhile, Ethiopia is dealing with ongoing unrest and fighting in its Tigray region.

In its home market, the lender is concerned about South Africa being added to the global illicit-finance watch-list, which would increase the cost of capital. The Paris-based Financial Action Task Force has asked Africa’s most-industrialized economy to demonstrate that it has a credible plan to address its deficiencies.

The required measures included tightening legislation and ensuring financial crimes are investigated and prosecuted.

The Business Leadership South Africa, a lobby group, estimates an 85 percent probability of the nation being added to the so-called gray list in February. Though Tshabalala said the odds are better now.

“Given the effort that has gone into it, the probabilities are now balanced,” Tshabalala said. “It’s still touch-and-go, but I think 85 percent probability is high.”

 

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