NAIROBI, Kenya, Dec 2 – The Central Bank of Kenya (CBK) on Friday granted authority to the FirstRand Bank of South Africa to set up a representative office in Kenya.
Under section 43 of the Banking Act, FirstRand bank will serve as marketing and liaison offices for their foreign banks but will not mobilize deposits.
FirstRand is one of South Africa’s largest banks that engages in corporate and retail banking, investment banking and asset financing services.
This makes it the fourth international bank to set up a regional office in the country joining Hongkong Shanghai Banking Corporation (HSBC) of Hong Kong in April, Nedbank of South Africa in June and HDFC Bank of India in June 2008.
Kenya’s vibrancy as a fiancial services hub has seen a number of international companies eye the country as a launching pad into the east African market. Visa International, a payment systems services company has also started operations in Nairobi to serve all markets in the region, while US bank JP Morgan Chase is eyeing an office in the Kenyan capital.
There continues to be growing interest in Kenya’s banking sector by foreign banks which supports Kenya’s aspiration under Vision 2030 to be a premier regional financial services hub.
CBK expects the interest by foreign banks to spur the local banking sector as well as make it more vibrant and competitive.
“On its part the Central Bank will continue to provide an enabling legal and regulatory environment to spur the growth and stability of the banking sector. A strong banking sector is expected to play a key role in financing Kenya’s growth aspirations,” CBK Governor Prof Njuguna Ndung’u said.
FirstRand is expected to open a fully fledged bank in Tanzania early 2012 after it was granted approval earlier in the year.
It is also present in Nigeria, Angola and has spread beyond Africa with branches in the United Arab Emirates, the United Kingdom and China.
The attractiveness of Nairobi as a hub is seen in the highly concentrated pool of skilled labour in the banking, accounting, legal, IT and public relations sectors. For the bank any area is attractive to invest as long as it has high returns be it financing infrastructure or agriculture and the South African bank is banking on the last two areas for growth.