Branch International, a digital lender has acquired Century Microfinance Bank in its latest expansion drive. With this move, it becomes first digital lender to expand into the microfinancing banking market, allowing deposit-taking financial services.
In the deal, Branch acquired a 84.89 percent majority stake in Century, getting access to its two branches Moi Avenue and Gikomba area in Nairobi that focus on SMEs and have 26,000 accounts
Branch indicated that they had engaged three other microfinance banks before settling on Century. This decision was based on years of operations, capital adequacy ratios, strategy in the market and governance structures. The entities are still in the integration process and are yet to come up with a name they will use.
The deal went through after the Treasury in January exempted the mobile lender from being subjected to a rule that prohibits the ownership of more than 25 percent stake in microfinance. In a gazette notice, Branch was exempted from section 19 (1) of Microfinance Act for a period of four years — January 1, 2022, to December 31, 2025.
Rose Muturi, the managing director, Branch East Africa, had this to say, “As a fintech, we were only allowed to do one product – microlending. In the space, the amount you can lend is limited because the risks are inherent based on the credit policy you are allowed. After seven years, we felt we can do more and allow customers to borrow more. From basics of banking and through license available from Century, we will be able to offer services to our customers including savings, paying bills and investment.