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JPMorgan gets Kenya entry nod as US banking giant eyes Africa expansion

International markets have emerged as a key growth area for JPMorgan, which has more than USD 4.2 trillion in assets and operates in over 100 nations

One of the biggest banks in the world, JPMorgan Chase, an American banking conglomerate, has finally received approval to establish a representative office in Kenya, almost 12 years after it revealed its intentions.

As it looks to expand throughout Africa, the American banking giant is allowed to begin operations in Kenya, according to a statement made by the Central Bank of Kenya (CBK).

The approval comes ahead of Jamie Dimon, the bank’s CEO, who is scheduled to visit Kenya in the coming days as part of a journey to four African nations to expand the lender’s presence on the continent.

This increases the number of foreign banks with representative offices in Kenya to ten, intensifying competition in the market, which attracts lenders from nations like France, China, India, Pakistan, Egypt, South Africa, Mauritius, and the Netherlands.

“The JPMorgan Chase Bank representative office Kenya will contribute to the diversity of Kenya’s financial sector and catalyse trade and investments,” CBK said, as reported by Zawya.

Furthermore, Kenya’s status as a leading financial services hub is reaffirmed with the authorisation of the Representative Office.

Although they are not allowed to conduct core banking operations like lending and deposit taking, representative offices assist foreign banks in marketing their goods and services within the nation and serve as a point of contact for local customers.

In Kenya and Ivory Coast, the bank will focus on commercial and investment banking, treasury services, and possibly some lending, Dimon told the Reuters. In those two countries, it has no immediate plans to offer asset and wealth management (AWM) services, which are already available in South Africa and Nigeria.

According to the CBK, the deals closed by foreign financiers with representative offices in Kenya increased by 13% in 2023 to Sh413.3 billion, from Sh365.6 billion in 2022.

Among other things, these transactions involved corporate, trade, real estate, specialised financing, syndicated, and project financing.

Nairobi is home to representative offices for ten international banks, including French lender Societe Generale, South Africa’s First Rand Bank, Bank of China, Bank of Kigali, Nedbank, and Cooperative Rabobank of Mauritius.

Meanwhile, the venture and growth equity investment division of JP Morgan Asset Management, JP Morgan Private Capital, announced that Paris Heymann has been appointed as a new Co-Managing Partner. Heymann will expand the platform’s technology investing practice thanks to his experience in late-stage private and crossover investing.

International markets have emerged as a key growth area for JPMorgan, which has more than USD 4.2 trillion in assets and operates in over 100 nations. That compares with Citigroup, which does business in almost 180 countries and has the largest global footprint among US banking giants.

“We want to add a country or two (enter or deepen presence) in Africa, every couple of years or so,” Dimon told Reuters before departing on a trip to Africa.

JPMorgan faces the challenge of differentiating its offering in disparate markets that are dominated by local and regional lenders, said Francis Mwangi, chief executive of Nairobi-based brokerage Kestrel Capital.

“To start off a commercial bank from scratch will have to take a bit of time and effort, especially in a market that is already overbanked,” he said, citing Kenya, which has 40 commercial banks serving a population of 50 million.

“Large US firms have traditionally struggled to compete on the continent because of geopolitical risks,” Mwangi said, citing markets that were previously subject to US government sanctions, such as Burundi.

JPMorgan’s earlier aspirations to enter Ghana and Kenya in the last several years were thwarted by regulators, according to media reports.

In the past, “the US government was not very keen on banks expanding into different geographies, as this was just after the financial crisis,” Dimon said, noting the US is now more supportive.

“It is a positive move if US financial institutions expand abroad, and the government should support such endeavours to compete overseas,” he said, citing the broad footprint of Chinese companies around the world and saying that American companies should also be in these places.

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