I&M Group is seeking to recapitalise its Ugandan unit by injecting Ush30 billion ($7.89 million) to shore up its lending business and comply with the Bank of Uganda’s new capital requirements.

The lender also looks to expanding its footprint in the Democratic Republic of Congo (DRC), the large market of which lenders across the region are scrambling to serve.

The fresh capital injection, which is to be executed within the next six months, will push I&M Bank Uganda’s core capital to Ush150 billion ($39.47 million) by June 2024 allowing the subsidiary to boost its lending activities, translating to more interest income to the bank and dividends to shareholders.

Read: I&M injects $219,000 in Ugandan unit to shore up capitalThe lender listed on the Nairobi Securities Exchange (NSE) is seeking to strengthen its corporate business as well as deepen its inroads into the Small and Medium-Sized Enterprises (SMEs) and retail space in the Ugandan market.“Uganda is a market where you see some significant increases in capital from the regulator. So, obviously, we have put our capital plans in line with them (statutory capital requirements) but at the time of acquisition we were already aware,” the group’s regional chief executive Kihara Maina said on December 18.“So, the focus then is on strengthening the capital and that means in markets where we feel we have the strength and the capability. We are strong in the corporate space, and we want to expand that and at the same time we are looking at making sure we are relevant in the SMEs and retail spaces as well. So, all of these investments we are making have been our focus on that area.”I&M Group entered the Ugandan market in 2021 through the acquisition of Uganda’s Orient Bank Ltd (OBL) as part of its regional expansion plan.

OBL was later renamed I&M Bank (Uganda). Last year, Uganda’s Finance minister in consultation with the BoU issued the Financial Institutions (Revision of Minimum Capital Requirements) regulations requiring financial institutions to have a minimum paid up cash capital of not less than Ush120 billion ($31.57 million) by December 31, 2022.

Read: I&M Bank completes acquisition of Ugandan lenderIt also increased this new capital requirement to Ush150 billion by June 30, 2024, and to always have minimum capital funds un-impaired by losses (core capital) not less than Ush150 billion ($39.47 million) by June 30, 2024.“We are actually completely compliant with these requirements. As of June 2023, we had adequately met the Ush120 billion ($31.57 million) requirement, but we have another requirement coming up from the Uganda regulator, which is that by June next year all banks have to have a minimum core capital of Ush150 billion,” said Mr Kihara.

The group currently has operations in Kenya, Rwanda, Tanzania, Uganda and a joint venture in Mauritius.

However, Mr Kihara said the group is open to new investment opportunities particularly in the mineral-rich DRC.“If the opportunity comes, we will look at them,” he said.

The DRC has attracted big banks within the region, including KCB, Equity and Tanzania’s CRDB Bank Plc.

Last year, KCB Group completed the acquisition of the Congolese lender Trust Merchant Bank (TMB), giving the lender a foothold in the country.

Read: KCB completes DRC bank acquisitionEquity, the largest lender in the region by market capitalisation, entered DRC by acquiring 86.6 percent stake in a German bank ProCredit between 2015 and 2017 and renamed the subsidiary as Equity Bank Congo (EBC) SA.

Later, Equity acquired another Congolese bank Banque Commercial du Congo (BCDC). The two banks were later merged to form EquityBCDC, DRC’s second-largest lender by assets.

Equity’s recent acquisition of Rwanda’s Compagnie Générale De Banque Plc (Cogebanque) pushed it to be the second biggest lender in East Africa’s fastest growing economy with the most profitable subsidiaries. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).