Branch Buys Kenyan Microfinance Bank, But Why?

Branch Century Microfinance

As reported by Business Daily, US-based digital lender Branch International will pay KES 230 million for a majority stake in a Century microfinance bank. This is amid tough regulations for mobile lenders in the Kenyan market.

Branch Buys Majority Stake in Century Microfinance Bank

Branch International will acquire an 84.89 percent stake in Century Bank. The Communications Authority of Kenya (CAK) has given Branch the go-ahead in this deal with a focus on agricultural finance.

CAK says both Branch and Century will each retain their existing performing and non-performing loans. This is until the expiry of such loans.

“The acquirer and the target will each maintain the terms agreed with the borrowers. This is in respect of all loans existing in their loan books at the time of the acquisition,” said Wang’ombe Kariuki, CAK director-general.

The digital lenders will be also required to obtain annual licenses from the regulators. Moreover, they will also maintain minimum capital ratios and declare their loan charges.

What does the deal Mean?

The Century deal means Branch will have to contend with a regulated market. This is unlike its primary playing field where digital lenders have been accused of charging customers very high interest rates.

This also means they are less likely to breach customer privacy by exposing loan defaulters to friends and relatives to force repayment.

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