Bank of Kigali eyes trade deals with new office

 

PHOTO | FILE Bank of Kigali offices in Rwanda. With the approval of Central Bank of Kenya, the Rwandese lender becomes the first financial institution from the East African region to be granted licence to run a representative office in Kenya. Six other foreign banks have already been granted a similar permit.  NATION MEDIA GROUP

By IMMACULATE KARAMBU ikarambu@ke.nationmedia.com
Posted  Tuesday, February 19  2013 at  19:27

In Summary

• Central Bank gives Rwanda’s lender licence to open representative branch in Nairob

Bank of Kigali has joined a growing list of foreign banks which are opening liaison offices in Nairobi to tap into trade opportunities in the region.

On Tuesday, the Central Bank of Kenya (CBK) granted Bank of Kigali Limited the authority to set up a representative office in Kenya, a day after a similar approval was given to state-owned Central Bank of India.

According to Samuel Gichohi, a senior research analyst at NIC Securities, foreign banks are also rushing to take advantage of cross border trade between Kenya and external markets by setting up local offices to reduce the turnaround period for effecting business transactions.

“With increasing cross border trade, there is a need to reduce red tapes for investors and increase the rate at which business transactions are effected.  Recent discoveries of mineral resources in the country are also bound to attract investments in infrastructure and other emerging sectors thus creating opportunities for banking institutions,” said Mr Gichohi.

Leading import source

Latest data from the Kenya National Bureau of Statistics indicates that India beat United Arab Emirates to become the leading source of imports to Kenya accounting for 13.3 per cent of the country’s total imports.

With the approval, Bank of Kigali becomes the first foreign bank from the East African Community to be granted authority to set up a liaison office in Kenya.

A total of seven foreign banks have so far been cleared by the CBK to operate representative offices in Kenya. According to CBK, such offices are limited to offering marketing and liaison services which include negotiating lending and trade finance deals but they are not allowed to collect deposits.

The local office will allow Bank of Kigali to evaluate the prospects for a long-term presence in Kenya as it will act as a marketing and liaison office for its parent bank.