Absa Bank Kenya, a prominent Nairobi-based bank partly owned by Kenyan businessman Baloobhai Patel, has secured a subordinate loan of $50 million from its parent company.
The loan, obtained at the end of the bank’s 2022 fiscal year, aims to bolster Absa Bank Kenya’s operations in the East African region and enhance its capital strength. It will reinforce Absa Bank Kenya’s capital base and facilitate strategic investments in new business lines.
This development follows previous loans from the parent company, including a $50-million loan in 2020 and a $25-million loan in 2019. With these additional funds, the bank’s total borrowing increased from $60.4 million in 2021 to $140 million by the end of 2022.
According to Absa’s annual report, the $50 million subordinated loan from Absa Group was acquired on December 21, 2022, and carries a maturity date of Dec. 21, 2032.
The loan’s interest is paid quarterly in arrears at a rate of 472 basis points above the USD SOFR (Secured Overnight Financing Rate), which is reset every three months.
Absa Bank Kenya, a key player in the Kenyan banking sector, is a subsidiary of Absa Group Limited, a renowned South Africa-based financial services group. The loan acquisition aligns with the bank’s strategic objectives to fortify its position within the East African market.
The bank showcased impressive financial performance in the first quarter of 2023, reporting a remarkable 50.7-percent increase in net profit, amounting to Ksh4.45 billion ($31.6 million), for the three months ending in March.
Patel, who is renowned for his significant investments in various sectors, holds a significant stake in Absa Bank Kenya.
Patel’s astute business acumen has positioned him as one of Kenya’s wealthiest citizens, with substantial stakes in blue-chip stocks that consistently generate dividends and exhibit steady price appreciation.
In line with Patel’s strategic investment approach in the financial services sector, he further fortified his holdings by acquiring an additional 5 million shares in Absa Bank Kenya Plc in 2022. This acquisition has solidified Patel’s position as one of Kenya’s leading investors.
