Category Archives: Family Finance

Which way the bank branch?

This month saw Family Bank open a branch in Eastleigh, its 92nd in the country. Family is one of the pioneers of paperless branches and had opened another branch in December near the large Wangige market to serve traders. Eastleigh is an important cog of Kenyan supply chains and is estimated to have the second-highest density of traders, second only to the Nairobi CBD. Despite advances in mobile transfers, small traders are still heavy users of cash for transactions.

Then today Diamond Trust announced the consolidation of six branches that are adjacent to each other: Oval and 9 West (both to Westgate), Eastleigh to Madina Mall, Garden City to TRM mall, Jamhuri Street (to Malindi) and Kago Street (to Eldoret). The bank asked customers to continue using alternative channels while staff will be redeployed to other branches and business units.

We can probably expect to see more branch consolidations or closures as two groups KCB-NBK and NCBA (CBA & NIC) continue to refine their new operating structures. CBA and NIC did some closures last year.

When KCB announced their third-quarter 2020 results, they shared some interesting details about branches and the march to digital. KCB branches did 2% of transactions in Q3 2020 compared to 5% the previous year. Also, there was a 16% decline in transactions done per day by branch tellers from 60 to 50, while customers did 43% fewer transactions (5.8 million compared to 10.2 million) than in the previous year. KCB customers did 77% of their financial transactions on mobile phones, 17% at agents / internet / point of sale (cards), and 4% at ATM’s. More ATM’s now accept cheque deposits, not just cash, and also act as 24-hour M-Pesa agents.

The Central Bank of Kenya’s Supervision Report for 2019 shows KCB with 203 branches, followed by Equity with 171 (and 12 sub-branches), Co-op Bank 152, Absa 107, Family had 92 in 2019, NBK 78, and Diamond Trust 70. Between 2018 and 2019 there was a drop of 16 branches from 1,505 to 1,490 with 7 of them in Nairobi that ended 2019 with 593.  NCBA has 37 branches but serves the largest number of bank customers in Kenya by far, 31 million thanks to M-Shwari, its partnership with Safaricom.

Outside the country, there is growth as Kenyan banks operate 316 branches in the region, up from 207. They are led by Equity that has 44 in DRC and 39 in Uganda,  Equity has a total of 116, followed by Diamond Trust with 68 (36 in Uganda, 28 in Tanzania, 4 in Burundi)  and KCB with 60.

During Covid-19, foot traffic has reduced at malls, offices shopping centres and bank branches. This has also been due to the growth of online shopping that has taken off exponentially, and many facilities now have dedicated desk and parking spaces for motorcycle delivery riders.

No sign yet of banks moving to share branch spaces with each other but there is less need for banks to be on the ground floor of buildings, which is usually more costly. Also, shopping malls tend to have a banking floor (top of Garden City mall) or ATM corner where several bank services are grouped.

African Banker Awards 2019 Nominees

The winners of the 2019 African Banker Awards will be announced on June 11 at the Annual Meetings of the African Development Bank (AfDB) in Malabo, Equatorial Guinea. 

Multiple nominees this year include Absa, the Trade & Development Bank, Equity Bank, and Standard Bank while first-time nominees include Family Bank of Kenya who partnered with Simba Pay to enable payments via WeChat to China, Kenya’s largest trading partner. There are also nominees for arranging sovereign Eurobonds and IPO’s, while UbuntuCoin, an asset-backed digital currency that was a finalist at last year’s awards, is nominated again.

The complete list of shortlisted nominees for 2019 are:

African Banker of the Year:  Admassu Tadesse (Trade and Development Bank), Brehima Amadou Haidara (La Banque de Développement du Mali), Brian Kennedy (Nedbank, South Africa), James Mwangi (Equity Bank, Kenya) and Johan Koorts (ABSA, South Africa).

Award for Financial Inclusion: 4G Capital (Kenya), Amhara (Ethiopia), Bank of Industry (Nigeria), Cofina (Senegal), Jumo (South Africa).

Best Retail Bank in Africa: Coris (Burkina Faso), Ecobank (ETI), Guarantee Trust Bank (Nigeria), KCB (Kenya), QNB AlAhli (Egypt).

Deal of the Year – Debt: Absa ($350M Old Mutual Renewable Energy IPP), Afrexim – ($500M ChinaExim Syndicated Loan), CIB ($389M Egyptian Refining Company), Rothschild ($2.2 billion Republic of Senegal Dual-Currency Eurobond), TDB ($1 billion Sovereign Loan to the Government of Kenya).

Deal of the Year – Equity:  Al Ahly (Canal Sugar Equity), EFG Hermes (ASA IPO), RenCap (CiplaQCIL IPO), Standard Bank / RMB (Vivo Energy IPO), Standard Bank IBTC (Flour Mills of Nigeria Rights Issue).

Infrastructure Deal of the Year: Absa (Enel Green Power), Afrexim (Syndicated Loan for EBOMAF/Government of Cote D’Ivoire), National Bank of Egypt (ElSewedy Electric Hydropower Project), RNB (Roggeveld Wind Power Project), TDB (Mozambique FLNG Project).

Innovation in Banking:  ABSA (South Africa), Family Bank (Kenya), KCB (Kenya), MCB Capital Markets (Mauritius), and Ubuntu Coin (Côte d’Ivoire).

Investment Bank of the Year: ABSA (South Africa), Coronation Merchant Capital (Nigeria), NedBank (South Africa), Rothschild, Standard Bank (South Africa).

Socially Responsible Bank of the Year: Access Bank (Nigeria), Bank Misr (Egypt), Equity Bank (Kenya), KCB (Kenya), Qalaa Holdings (Egypt).

Bank Roundup: January 2019

The boards of NIC and CBA banks confirmed their plans to go ahead with a merger to create the largest bank in Africa by customer numbers. Serving over 40 million customers in 5 countries, the combined entity will have Kshs 444 billion in assets (~ $4.4 billion).

Currently, they are both at 115 billion of loans and have differences in deposits with 145 billion at NIC to 191 billion at CBA and customer numbers of 142,000 at NIC to 41 million at CBA. They had relatively similar customer numbers prior to CBA’s launch of M-Shwari in partnership with Safaricom. 

Going forward they aim to obtain shareholder approval in Q1, obtain regulatory approval in Q2 and have the new entity commence operations in Q3 of 2019. Currently, NIC has 26,000 shareholders and is listed on the Nairobi Securities Exchange (NSE) while CBA has 34 shareholders (20 individual, 14 corporations) including Enke Investments (24.91%), Ropat Nominees (22.50%), Livingstone Registrars (19.90%) and  Yana Investments (11.14%). The merger will be effected through share swaps that will result in NIC shareholders owning 47% and CBA shareholders 53% of the new entity whose shares will remain listed on the NSE.

MCB in Kenya:  Leading Mauritius Lender MCB Group has officially opened its representative office in Nairobi. The largest and oldest bank in Mauritius, with $12 billion in assets and a presence in nine countries, it had been licensed in Kenya back in 2015 and it will bank on its new office to gauge opportunities in the Kenyan market and build strategic relationships.

The 19th largest bank in Africa by assets, it is listed in Mauritius and has 19,000 shareholders. It has a strategic objective of growing its international footprint and expanding non-bank activities. It has 1 million customers, 3,500 employees and 55 branches but, as it was communicated at the launch, they have no intention of opening branches in Kenya or East Africa.

Ethiopia Bank summary: Asoko Insight gave a summary report of the Ethiopian banking sector, parts of which are only available to subscribers. While some foreign investment is expected in Ethiopia, the banking sector is already privatized with fifteen of the country’s eighteen banks all having private local owners. The state-owned Commercial Bank of Ethiopia is the largest bank in the East Africa region with 1,280 branches and earns 67% of the sector profits in the country.  It has revenue of $1.3 billion, while 11 (other) banks, have revenues of between $50 million and $500 million, suggesting a more concentrated market in terms of size.

Tanzania:  NMB bank has waived several bank charges for their customers from February 1 including account opening, monthly maintenance, transaction fees, dormant account reactivation, and internal transfers – all in a bid to promote financial inclusion in the country.

Meanwhile, several Tanzania banks have a series of new managing directors including NIC Bank, Akiba Commercial Bank and Bank of Africa Tanzania

Family Bank pled guilty in the NYS case:

Diamond Trust CEO questioned.

Biggest Banking Stories of 2016

Some are carry-overs from 2015, but still having an impact on the banking sector in 2016 include:

1. The shutdown of Chase Bank in April 2016 came after a 24-hour period that started with a second set of 2014 financial accounts published in unclear circumstances in a newspaper, with different figures. Whether this was due to a reclassification of Shariah loans or (insider) director lending was never explained, but it accelerated an ongoing run of withdrawals and the Central Bank had to close the bank the next day. While it reopened a few weeks later with funding from the central bank (channeled through KCB), and depositors have been able to access some of their funds, the bank is not back to its full standing (it’s till not lending in full, and there’s a moratorium on depositors interest) and  new investors are being sought to enable the bank to stand on its own from April 2017.

2 Njomo Bill: In a rare bi-partisan move, usually reserved for their own salary raises, members of parliament rallied around to take on an even less popular target – that of super profit making, high-interest rate, banks with the Njomo bill. This was the latest attempt to rein in interest rates and the president surprisingly signed the bill, passing on a hot potato which was expected to lead to a slowdown in lending and make banks less attractive to investors.

3. Governor Patrick Njoroge at the Central Bank. Widely admired by the public for his no-nonsense enforcement & understanding of rules, supervision, austerity, and honestly to clean up the banking sector, but vilified in some circles for his unreasonable decision-making that has seen three banks close under his watch.

4. Last year Imperial Bank closure was a shock, and in 2016 the extent of the shell is still becoming clear through numerous court documents pitting the receivers, regulators, shareholders, some customers and even the family of the later managing director who engineered the fraud. But all that pained depositors want to know is, where is the money, how much money is there, and when will they get paid?

5. Lax government banking. From not following up whistleblowers on Family, Chase and Imperial, to a reluctance to act on South Sudan leaders. From double payments to government contractors, to county and national governments having dozens of banks accounts for inexplicable reasons. From a parastatal moving to a single signatory and withdrawing all its’ funds to pay a fictitious contract, and the funny banking of NYS money by Josephine Kabura at Family Bank. The anti-fraud / anti-money laundering/ anti-terror rules are  not being observed.

Banks React to Press

A couple of banks are in the news and are trying to put back some bad news.

Family Bank (No. 14 by assets) had been mentioned adversely at  parliamentary hearing s over the manner in which they handled accounts through which money frofamily-bank-statementm the National Youth Service was withdrawn. Related to that have been stories that the Central Bank of Kenya has recommended prosecution of several bank staff who oversaw these accounts. The bank has put out a vague statement on Facebook responding to the allegations and highlighting its strengths and management.

Another bank, Prime Bank (No. 18 by assets) is in the news after its Chairman was reported to be the second largest shareholder of Crane Bank in Uganda which was taken over last month The Bank first put out a statement noting that it has no links, facilities or exposure with Crane Bank in Uganda.

prime-bank-statementThere have since been more social media messages (WhatsApp and Twitter) including one claiming that some prominent customers had withdrawn cash from the bank in panic.

The bank has now put out a second statement clarifying that the people named as large depositors are in fact not customers at their bank and that they have lodged  complaint with the Central Bank and CID, asking them to investigate the source of the rumours.

Its’ difficult for banks to respond to such rumours, but they have to considering they can have an impact on liquify at the bank, even if they are not factual. The communication does not have to be online, but through reassurance to key depositors, customers and the regulators.