MICROCAPITAL STORY: Ecobank Looks to Close Deal for 75 Percent Interest in East African Building Society (EABS) with Aim to Focus on Microfinance, Mortgage Finance and Investment Banking

Ecobank, an African regional banking group, is currently in the process of closing a deal in Kenya to acquire a 75 percent interest in Kenya’s East African Building Society (EABS) bank. In order to close the deal, and begin transactions, Ecobank must wait for official legalization. The deal’s value is estimated to total the equivalent of USD 19.3 million.

Initially agreed upon in January 2008, the deal will allow Ecobank to expand its services into Kenya and to the East African region. Ecobank aims to double the number of EABS branches in the country and provide their Kenyan clients with inter-regional access to ATM’s in Ecobank’s other African locations. They also aim to focus on microfinance, mortgage finance and investment banking. Ecobank foresees that the deal will incite increased competition and is currently investigating further investment options. Ecobank currently participates in the stock exchange of eight countries.

Ecobank, “The Pan African Bank”, was founded in 1985 and currently has operations in 22 countries in West and Central Africa. Through its 450 branches, it offers wholesale, retail, commercial and investment banking services to individual and corporate customers both public and private. According to its 2007 Annual Report (p 116), Ecobank has total assets of USD 6.6 billion for year end December 31st 2007. Its return on average assets was 2.8 percent and based on its total liabilities of USD 5.9 billion and shareholder’s equity of USD 513 million, its debt-equity ratio was calculated as 11.49 percent. MicroCapital reported on Ecobank here, and featured Ecobank in an August 2007 Who’s Who in Microfinance article.

EABS, headquartered in Nairobi, was established in 1959. Through its eight branches, EABS provides retail, corporate, small business and trade finance as well as a network of ATMs. EABS reported total assets as the equivalent of USD 160 million with further information only available upon request.

By Sarah Knapp, Research Assistant

Additional Resources

Business Daily: “Ecobank to acquire 75 pc of E. African Building Society

Ecobank: 2007 Annual Report, Introduction 

East African Building Society: Financial Information, January 2008 Press Release

MicroCapital.org: NEWS WIRE: Kenya: Ecobank Closing Deal to Acquire 75% of East African Building Society (EABS Bank). Who’s Who in Microfinance: Ecobank, August 7, 2007

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