Co-operative Bank raises Ksh 12.6bn for lending
NAIROBI-The Co-operative Bank of Kenya has raised a total Ksh 12.6 billion [US$ 100 million] in long-term debt from global institutional investors led by the German fund DEG, according to the local media reports.
The subordinated loan was channelled through the European Financing Partners –a joint venture between the European Investment Bank [EIB] and several European funds and will help Co-op Bank to boost its capital reserves.
This was disclosed by Norwegian fund Norfund, one of the institutions participating in the financing with a direct credit line of US$ 16mln [Ksh 2bln] and another US$ 3.4mln [Ksh 430mln] through the European Financing Partners.
According to officials, the funds will strengthen the bank’s capital base, support lending to Micro, Small & Medium Enterprises [MSME] and position the bank for future growth. The bank also operates in South Sudan.
“Co-operative Bank is the third largest bank in Kenya, 65 percent owned by local co-operatives and the largest co-operative bank in Africa,” said Norfund on its website.
Kenyan banks have in recent years taken substantial loans from global funds such as the International Finance Corporation [IFC], EIB and Agence Française de Développement [AFD], attracted by relatively more favourable terms of debts including lower interest rates and longer maturity.
By the end of 2021, Co-operative Bank’s outstanding long-term borrowings from such institutions as IFC and AFD stood at an equivalent of Ksh 19.6bln.
The lender said in its latest available annual report that most of these funds were used to provide credit in areas spanning renewable energy, mortgages, and agribusiness.
IFC, the World Bank Group’s private investment arm, is the leading long-term partner for local banks having committed a total of Ksh 111.7bln to 31 Kenyan lenders by April 2021.
A disclosure by the IFC showed that Equity was the main beneficiary of this financing having received Ksh 42bln from the global financier in the review period.
KCB and Equity, two of the country’s largest lenders, are among banks that have borrowed from international financiers to fund their long-term lending business.
Source: Business Daily
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