Wachira Kang'aru

7 September 2010

Nairobi — Standard Chartered Bank of Kenya on Tuesday entered the final stage in a move that will help the London-owned financial institution increase its dominance in the Middle-East, Asian and Africa trade corridor.

Kenya's second largest bank by profitability launched its rights issue offering its shareholder an opportunity to increase their stakes by buying one share for every 18 held at a price of Sh165.45.

The Sh2.5 billion to be raised will be partly used to acquire the Africa custody business from its rival Barclays Bank putting in its hold, over Sh4 billion in assets management.

The move is a wider strategy by the bank to increase its presence in trade whose importance is increasing as commerce between the three regions balloons.

"Our network in the Middle East, India, China and South East Asia has proved to be important in giving us opportunities to leverage on as trade corridors change," StanChart managing director and chief executive officer Richard Etemesi told investors at the launch of the rights issue at the Nairobi Hilton Hotel.

Take up their rights

Trading of the rights commenced on Tuesday with the last date for investors to take up their rights set on September 28, 2010.

The bank's core business has been in financing corporates transacting in and across the three regional markets hence the need to have a closely knitted footprint in the three areas.

StanChart Kenya is owned (75 per cent) by the London Stock Exchange listed Standard Chartered Bank Plc, though Standard Chartered Holding.

"Our strategy is to have securities services franchise that span Asia, Africa and the Middle East, giving us unique coverage of these three regions," said Mr Etemesi.

Standard Chartered Bank Plc is to pay Sh3.6 billion to acquire the Africa custody business with the Kenya subsidiary paying Sh1.8 billion for its portion of pie.

The Sh700 million balance on the Sh2.5 billion to be raised from the rights issue will be injected to grow the bank's capital base as it looks to increase its lending power.

"This rights issue has therefore been necessitated by the need to raise equity to purchase Barclays Bank of Kenya custody services business as well as assist the bank continue to grow its business," StanChart chairman Wilfred Kiboro said in his address during the launch.

The bank said that it already has a presence in Asia as securities services provider.

StanChart said that it is now seeking entries in the Middle East and South Asia region adding that the current buyout has sorted out the Africa region.

The buyout gives StanChart a foothold in 16 African markets.

It has a direct presence in Botswana, Ghana, Kenya, Mauritius, Tanzania, Uganda, Zambia and Zimbabwe and indirect capabilities in a further eight markets that include Egypt, Cote d'Ivoire, Malawi, Morocco, Namibia, Nigeria, Tunisia and South Africa.

"This acquisition from Barclays ensures that we can rapidly develop our capabilities across Africa," said Mr Etemesi.