The value of transactions facilitated by representative offices of foreign banks in Kenya doubled to Sh239.7 billion last year, indicating they are taking a larger role in arranging financing deals in the country.
The banks’ offices mainly facilitated deals in syndicated lending, specialised, project and trade finance, Central Bank of Kenya says in the 2016 bank supervision annual report.
The syndicated lending deals were worth Sh61.5 billion, specialised finance Sh21.3 billion, project financing worth Sh18.8 billion, trade finance at Sh18.1 billion and correspondent banking worth Sh11.9 billion.
Other financing aspects which also include term loans and working capital were valued at Sh108 billion.
“There was a notable increase in the business activities facilitated by the Representative Offices in 2016 at Sh239.65 billion ($2.39 billion) when compared to Sh109.31 billion ($1.07 billion) reported in 2015. Four of the eight Representative Offices facilitated financial transactions in the year… the other four continued marketing and liaison roles,” says CBK in the report.
While there were eight representative offices in Kenya by the end of last year, the number has fallen by one after the closure of the office of the Central Bank of India (CBI), which has decided to close operations in the international markets.
Representative offices are opened by foreign banks who wish to have a presence in the country without having to launch fully fledged banking operations and are only allowed to do research, marketing and liaison roles on behalf of parent banks.
Following the closure of CBI’s office, the remaining representative offices are maintained by FirstRand Bank of South Africa, Bank of China, HDFC Bank of India, Bank of Kigali, Mauritius Commercial Bank and Dutch lender Rabobank Nederland.
Credit: Business Daily