KENYA – Barclays Bank of Kenya plans to start agency banking, which will make it the first international lender to embrace the model. The bank is expected to start contracting agents before the end of March.

This will also signal plans by Barclays, largely viewed as a corporate lender, to delve deeper into retail business.

“We are quite serious about agency banking because we need to look at how to take banking to our customers – you can expect to see something there pretty soon,” said Barclays chief executive Jeremy Awori.

The entry of Barclays into agency banking also acts as a vote of confidence to the model with international lenders having taken a wait-and-see attitude since its introduction in 2011.

Standard Chartered is yet to take up the model making it the only top tier lender yet to do so.

Banks have taken up the model to boost of efficiency resulting from savings associated with fixed costs of opening and maintaining a new branch.

The Central Bank of Kenya (CBK) said 17 commercial banks had contracted 39,871 agents as at end of September last year who had conducted over 193.4 million transactions valued at Sh1 trillion.

Under agency banking, financial institutions do not have to open branches in areas where they are unrepresented but can contract third parties to offer some of their services such as account opening, balance enquiries, cash deposits and withdrawals.

Equity Bank had contracted 22,017 agents as at end of September when it said that it had stopped recruiting new agents in an effort to ensure profitable business to the existing ones.

The bank said agents were conducting more than half of its transactions, being more than that done by ATMs and branch tellers combined.

KCB had over 10,000 agents and Co-operative Bank 8,700 as at end of September.

Banks have contracted businesses such as supermarkets, pharmacies, couriers, hardware shops and post offices as third party agents to provide cash-in cash-out transactions and other services.

Mid-sized banks, which largely target corporate customers, such as the Commercial Bank of Africa, NIC Bank and Chase Bank have signed with Post Bank, which has more than 99 branches across the country.

Barclays Bank, which is celebrating 100 years of operating in the country, has been expanding its revenue streams in a bid to boost its bottom line which has grown at a slower pace than some of its competitors resulting in its slide down the profit ladder to rank fifth from the pole position 10 years ago.

Last month the lender started offering brokerage services for equities listed on the Nairobi Securities Exchange through its subsidiary Barclays Financial Services.

The subsidiary will also offer services such as advisory on mergers and acquisitions, debt and equity issues.

Capital gains

Last year it opened bancassurance services following change of law to allow international lenders to operate in the insurance sphere.

In 2013 the bank stepped up its Treasury bonds dealing department in a bid to book capital gains from trading government securities unlike previously when it preferred a conservative position of holding the paper until maturity.

Capital gains are booked from downward movement of interest rates, but expose lenders to losses whenever interest rates move

February 17, 2016;