In conversation with Hussein Abaza, CEO and managing director of Commercial International Bank (CIB)
Commercial International Bank recently became the first Egyptian bank to establish a fully owned banking subsidiary in Kenya, after acquiring the remaining 49 per cent of Mayfair in the country for a transaction value of $14m.
The bank first entered the Kenyan market in April 2020 by purchasing a 51 per cent stake in Mayfair, which caters to high-net-worth individuals and the corporate market segment.
Despite its small size with only five branches and a market share of just over a quarter of a per cent, Mayfair will provide a platform to allow CIB to expand its presence in the Sub-Saharan Africa region.
What was behind the decision to enter the Kenyan market?
Entering the Kenyan market or expanding into Africa has been a long-standing goal for us at CIB.
Egypt has been witnessing greater and greater economic integration into the rest of Africa over the past decade. With the new Africa Free Trade Agreement and increased economic and political integration, as well as commercial ties and relationships, we felt it was the perfect time for us to be a part of this new dawn of what could be a new golden era of trade with Africa.
Reduced or zero customs duties on trade moving between two markets is perfect, and that is what we now have between Egypt and East Africa.
Many Egyptian companies already do business in Africa and many more are looking to export. Our customers too are increasingly doing business in the region, and we want to be there to support them.
Given the proximity, similarity and trade ties with East Africa, it makes a lot of sense for us to be there. For example, Egypt is the second-largest importer of Kenyan tea in the world. With the acquisition of Mayfair Bank, we can support these businesses and tap into the growing trade between our countries.
Reduced or zero customs duties on trade moving between two markets is perfect, and that is what we now have between Egypt and East Africa
Why was Kenya the right entry market for Commercial International Bank’s expansion into Africa?
East Africa is a natural starting point for us due to its proximity, language and growing trade ties.
Kenya is a hub for East Africa because of Mombasa, and it is the perfect steppingstone for us to launch our digital initiatives in the region.
Kenya’s cloud-based regulatory environment makes it a cost-effective starting point, and the African continental free trade area provides opportunities for increased trade between Egypt and the region.
There is a strong regional trade network and immediate potential for trade growth with Uganda, Rwanda, Burundi and Tanzania, so the business opportunities are clear.
Mayfair Bank is a well-established player in the region, targeting high-net-worth individuals and the corporate market segment. With our extensive experience and resources, we believe we can support the growth of these businesses and help them tap into the growing opportunities in the region.
So we are grateful for the vote of confidence from the Central Bank of Kenya in granting their consent for the acquisition, and we look forward to contributing to the prosperity of the Kenyan economy.
Who will be the target clients and business areas for Commercial International Bank in Kenya?
We see a great opportunity in serving both corporate clients and individual clients. Our goal is to have a healthy blend of both, like we have in Egypt.
For corporate clients, we see opportunities in serving both Egyptian companies looking to do business in Kenya and Kenyan companies looking to do business in Egypt.
On the individual client side, we see great potential in serving high-net-worth individuals as well as small to medium-sized enterprises who are looking to grow their businesses.
Initially we expect to be focused on trade finance, but we are looking to expand further and bring in a lot of digital products. From the retail perspective, we want to very much work with the advantages that Kenya offers in terms of digital regulations.
We also want to start looking more at small and medium-sized enterprises (SMEs) and corporates on the lending side.
Our plan has gone beyond the initial sort of idea where it was simply a trade finance bank and into a fully-fledged-digital/bricks-and-mortar hybrid approach.
We are still looking at various sorts of scenarios, but we will certainly be investing capital into the business over the next 18 months.
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