Co-operative Bank was among the top financiers that saw the birth of East Africa’s largest mall, Two Rivers.
It has emerged that Co-operative Bank gave the project a loan of Sh. 9.2 billion. This follows a revelation that is set to elevate the bank’s position as a top lender for mega projects in the country.
Initially, Co-op Bank funded Two River’s administrators, Two Rivers Lifestyle Company Sh. 1 billion to buy the 100 acres for the mall.
“Co-operative Bank has been involved throughout the life cycle of this project. The bank was involved in the acquisition of the 100-acre land parcel by way of advancing the first Sh. 1 billion to Centum,” said Gideon Muriuki, the managing director.
When the construction phase kicked off, Co-op Bank extended another loan of Sh. 8.24 billion to the project.
“The bank was subsequently involved in structuring the financing deal right from conceptualization and later advanced a project financing facility of Sh. 8.24 billion ($80 million) for the development,” he said.
Interestingly, the bank’s exposure in the loan disbursement remains within the Central Bank of Kenya’s statutory limit.
“It currently stands at 18.8 per cent, going by the third quarter financial results,” says Moses Khaemba, a financial analyst. According to Co-op Bank’s September 2016 results, its core capital was at Sh. 48.8 billion from a net profit of Sh. 10.5 billion.
Mr. Khaemba further notes that the decision by Co-op Bank to lend to the project shows a growing faith in accessing local credit for local major projects.
“This shows that large scale developers do not have to seek funding from overseas when there are easy-to-access local options,” he says. His sentiments echo President Uhuru Kenyatta’s note during the official opening of the mall that in less than a week had seen 35,000 visitors.
“The bank’s ability to lend the developer a huge amount of money was a clear indicator that Kenya’s financial services sector is maturing,” said the president.