Coop Bank to get Sh10.7b IFC loan

By: IMMACULATE KARAMBU

Co-operative bank is set to get a Sh10.7 billion loan from the World Bank’s private lending arm, joining a growing list of banks that have received funding from the International Finance Corporation (IFC).

The funds will be used to increase the bank’s lending to the small and medium enterprises (SME) sector and expand its construction and mortgage financing portfolio.

“The project will be supported by IFC’s global SME facility and the Women Entrepreneurs Opportunity facility.

The total project cost is estimated at $105 million and will comprise of a loan for IFC’s own account of $60 million and $45 million under IFC’s managed Co-lending Portfolio Program,” reads a disclosure document from IFC.

MATURITY PERIOD

The loan will have a maturity period of seven years with a two-year grace period on principal repayment.

Disbursement of the funds is awaiting approval by the IFC’s board that is set to meet at the end of next month.

Last year, several banks rushed to borrow from international institutions including IFC and parent companies to comply with new regulations that require them to raise their core capital to Sh1 billion.

Last year, NIC bank reached a deal with the IFC for a $50 million loan to boost its core capital and increase lending to the SME sector.

Kenya Commercial Bank received Sh12.9 billion from IFC in 2013 to finance mortgage lending, in addition to a Sh8.8 billion that was received from the corporation in 2011.

Equity bank bagged a Sh8.3 billion loan from the World Bank institution in 2012 for small businesses lending while Co-operative bank got Sh5.5 billion during the same year.

Multilateral lenders such as the IFC advance loans to institutions at interest rates lower than the market rates this allowing them adequate margins from lending to local borrowers.

SOURCE: DAILY NATION