Family Bank headed to South Sudan

November 28, 2011
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, NAIROBI, Kenya, Nov 28 – Family Bank is set to embark on its regional expansion with the setting up of a subsidiary in South Sudan in the last quarter of 2012.

The bank will enter the market through strategic partnerships with local investors where it will have a controlling stake in the venture to ease its market access.

Family Bank Chief Executive Officer Peter Munyiri said this approach would reduce the bank’s exposure and ensure breaks even much faster in a new market.

“I believe that for you to be able to conquer the cultural barriers you will need to come up with a model which is inclusive and takes into account the local commercial sensitivities. When you get into a foreign market and just set up your bank literally you can have a backlash where the culture there makes your business entry difficult,” Munyiri said in an interview with Capital Business.

The bank had initially thought of market entry through acquisitions but has since revised that to suit current market conditions. Munyiri said they had had already talked to banks such as Ivory bank and Nile Commercial Bank to ease regulatory requirements.

The CEO however said that negotiations with the South Sudan government has been fruitful and will make its entry with four branches in the market.

“Banking has got a lot to do with your interface with the market and your customers. It’s not all about buildings but more to do with how you are able to interact and we have been getting some positive vibe from the government there,” he said.

Family Bank will join the ranks of Equity Bank and Kenya Commercial Bank as local banks that have been able to venture into the regional market. The earnings from the subsidiaries have been able to boost the banks profits, an enticing factor that Family Bank will be seeking to tap into.

In 2010, Family Bank unveiled a consortium of private equity firms as their new strategic investors, acquiring 22.31 percent stake in the bank. This pushed up its total shareholder funds by 97 percent from Sh1.6 billion in 2009 to Sh3.1 billion.

The bank is set to use the newly generated funds to drive its expansion agenda with Uganda being the second market the bank has its eyes set on.

Munyiri said South Sudan is shaping up as a lush ground for growth for local companies with Kenyan financiers are racing to seek a foothold in the market to be part of the expected boom.

“The market is like how Kenya was in the 50s, and things can only get better and you can only grow when your there. I will not say it’s not competitive but we believe that its one market where the opportunities are hanging,” he said.

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