{{Equity Bank has shelved plans to open subsidiaries outside East Africa until its current foreign divisions start generating at least a quarter of its income.}}<\/p>\n
The bank has been keen to establish a Pan-African operations and last year mentioned plans to raise funds through a secondary public share offer to enter central, western and Southern Africa market.<\/p>\n
Now, the bank says it will first focus on consolidating gains in eastern Africa where it operates in Uganda, Tanzania, South Sudan and Rwanda.<\/p>\n
\u201cWe want to pause a bit and look at our subsidiaries to help them contribute at least 25 per cent of revenues,\u201d Equity Bank CEO James Mwangi told the Business Daily on the sidelines of the lender\u2019s AGM last week.<\/p>\n
\u201cThere is need to consolidate our presence in those markets to match Kenya.” <\/p>\n
Currently, the foreign subsidiaries account for 13.5 per cent of Equity Bank\u2019s total income of 36.8 billion. <\/p>\n
Profits from the subsidiaries nearly doubled to Sh1.08 billion in the year to December compared to Sh552 million in 2011 and a loss of Sh330 million in 2009.<\/p>\n
The freeze in opening new foreign subsidiaries is in line with last year\u2019s report by Citigroup Global Markets Inc, which advised Equity Bank to consolidate its eastern Africa operations. <\/p>\n
\u201cIn our opinion, Equity Bank needs to focus on delivering on its East African expansion strategy before going pan-African,\u201d says the report.<\/p>\n
Regional expansion is becoming important as the East Africa Community (EAC) common market takes shape, opening way for free movement of factors of production in a market of 130 million people.<\/p>\n
Kenyan companies are racing to open subsidiaries in the regional countries with banks following suit. It has caught the eye of Equity Bank, KCB and DTB.<\/p>\n
The foreign subsidiaries of Kenyan banks had surpassed 2011 profits three months before the end last year, underlining the importance of the units to the lenders\u2019 bottom lines.<\/p>\n
(Read: EAC subsidiaries drive top Kenyan firms\u2019 earnings)<\/p>\n
Central Bank of Kenya (CBK) data shows that the 10 banks with subsidiaries in the region had a combined profit of Sh3.8 billion in the nine months to September \u2014 which is higher than the Sh2.3 billion they posted last year. They made Sh2.5 billion in the six months to June.<\/p>\n
Kenyan banks led by Equity and KCB had opened 269 branches in the region as at September up from 240 in June and 223 in December. <\/p>\n
The pursuit of the regional agenda is exciting investors with Equity Bank\u2019s top shareholder Helios EB making a U-turn on pledge to exit.<\/p>\n
BusinessDaily<\/p>\n","protected":false},"excerpt":{"rendered":"
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