AfDB approves Sh6 billion package for PTA Bank

CIC Insurance plans to diversify from its core business with an eye on booming real estate sector to boost it streams of revenues. FILE 

By CHARLES MWANIKI,

The African Development Bank (AfDB) has approved financing worth Sh6.02 billion ($70 million) to the regional financier PTA Bank for project funding.

The financing consists of Sh1.75 billion ($20 million) in additional equity and Sh4.35 billion ($50 million) in credit line.

According to AfDB, the financial package will contribute to mobilising financial resources for development of the Tripartite Free Trade Area (TFTA) region, that will ultimately contribute to economic development and generate employment opportunities.

“This financial package will allow PTA Bank to finance a mix of small- and medium-scale enterprises as well as regional infrastructure projects. Moreover, this package will contribute to mobilising financial resources for development of the TTFTA region,” said AfDB on Wednesday.

PTA Bank was established in 1985 as the financing arm of the Common Market for East and Southern Africa (Comesa) and is headquartered in Bujumbura, Burundi.

The bank is currently owned by 19 members comprising 17-member states from the eastern and southern Africa region, one non-regional member (The People’s Bank of China) and one institutional member (AfDB).

The regional member’s shareholding is 87.71 per cent whereas the non-regional shareholding stands at 6.53 per cent. Institutions hold 5.76 per cent.

Commenting on the shareholding of PTA Bank during the bank’s annual meeting of governors in Addis Ababa on September 13, its president Admassu Tadesse said out of an authorised capital of $3 billion, only $1.3 billion has been subscribed.

He added that the general capital increase that comes to an end in December this year has been implemented toward a success rate of 90 per cent, whereby members have collectively invested close to $100 million (Sh8.7 billion) in new equity.

The bank has been looking to increase its exposure in countries where it has previously seen lower project approvals, including Kenya.

“Last year, 66 per cent of the bank’s project approvals were in three countries, namely Tanzania, Kenya and the Sudan, where the bank’s exposure is moderate, relative to country limits and the portfolio,” said Mr Tadesse in Addis Ababa.

PTA Bank in August 2012 participated in the $600 million syndicated loan to the government of Kenya as lead arranger, with a $50 million ticket in the loan which also included other lenders Citibank, Standard Bank (SA) and Standard Chartered Bank.

(READ: Thirteen banks take up Kenya’s syndicated loan)

The bank was also part of a consortium of lenders led by CfC Stanbic Bank which in August 2013 secured a Sh10.5 billion ($120 million) loan deal for the Kwale International Sugar Company Ltd (Kiscol) to finance construction of a milling, distillery and power plants.

PTA bank was the second biggest contributor at Sh1.75 billion ($20million) behind CfC Stanbic Kenya (Sh1.96 billion/$22.5 million). Standard Bank (Mauritius) provided Sh1.3 billion ($15 million) with the remainder sourced from a consortium of Kenyan and Mauritian banks.