Mauritian lender seeks more buyouts

Wednesday October 11 2017

SBM Holdings is seeking to expand both

SBM Holdings is seeking to expand both organically and inorganically. FOTOSEARCH  

By JAMES ANYANZWA
More by this Author

Mauritius SBM Holdings is seeking to acquire more Kenyan banks to boost its balance sheet and realise its ambitious plan of transforming into a Tier 1 bank in three years.
In May, the state-owned lender acquired loss-making Fidelity Commercial Bank (FCB) and injected $20.2 million into the business.

Its Kenyan subsidiary — SBM Kenya — currently has assets valued at $70 million and deposits totalling $50 million. It has a branch network of 10 — six in Nairobi and four in Mombasa.

In an interview with The EastAfrican, lead executive and advisor to the SBM Group Moses Harding John said the bank is seeking to acquire the assets and liabilities of other banks to boost its portfolio.

“We are interested in building our portfolio and are ready to look at the assets and liabilities of any bank as long as we feel they are good for us,” he said.

“When we ventured into Kenya, our aim was to get a banking licence. Now we have a foot in the soil and can seek bigger things. We can now grow both organically and inorganically.”

Organic growth occurs when a business re-invests its profits in new assets to gain more income, while inorganic growth is as a result of mergers and acquisitions.

The acquisition of FCB gave SBM room to expand its operations in East Africa and other countries on the continent.

“We have a more in-depth plan for our African development particularly in the East African region,” SBM Holdings chairman Li Kwong Wing said after the transaction in May.

SBM Group is the second largest company listed on the Stock Exchange of Mauritius.

Its banking arm SBM Bank (Mauritius) Ltd, has a presence in Mauritius, Kenya, India and Madagascar, and a representative office in Myanmar.

Speculation has intensified that the lender is the front runner in the race to acquire Chase Bank.

Race to acquire Chase Bank

But SBM denies that it is in the running for Kenya’s Chase and Imperial Banks, which are on auction after being put in receivership.

In March this year, CBK and the Kenya Deposit Insurance Corporation (KDIC) extended the receivership period of Chase Bank by six months up to October 6 to allow time for the bank to be sold to a strategic investor.

But shareholders are uncomfortable with how CBK and KDIC are handling the selling process.

In August, Chase Bank shareholders through their lawyers Anjarwalla & Khanna Advocates wrote to CBK and KDIC raising a number of concerns including not being allowed to participate in the process of picking a strategic investor.

They say this has infuriated them to the extend that they plan to contest the outcome of the process.

The shareholders want the process to ensure that depositors’ interests are protected and that they recover all their funds. They also want the interests of long term creditors to be protected and the bank sold as it is without separating it into “good bank” and “bad bank” — a strategy used to  classify a bank’s assets by separating bad loans from good ones so that the “good” are not contaminated by the “bad,” thereby alleviating the concerns of investors.