Family Bank receives Sh3.4b for SME lending

Mid tier lender Family Bank has received Sh3.4 billion from the European Investment Bank (EIB) for lending to Small and Medium businesses.

The bank has been turning to cheaper sources of funds in an effort of growing its loan book.

This is the second line of credit Family Bank has opened with EIB having received Sh2 billion back in 2014 for SME lending.

Family Bank Chief Executive Peter Munyiri said the funds are a major boost to the bank in its efforts of growing its SME business.

“This  SME Sector where the funds will be deployed  forms the bulk of revenue-generating and employment creation in our economy. Addressing access to funding for this sector is therefore of utmost importance to us as a Bank and the economy at large,” Mr Munyiri said.

The bank is expected to receive a further Sh1.1 billion from EIB in May, which will bring its total facilities received from international lenders to Sh6.6 billion.

Local banks have increasingly been turning to international lenders who provide credit at cheaper rates. Unlike customer deposits, funds borrowed from development financiers come at low interest rates and longer tenures enabling banks to structure loans mainly in favor of small and medium sized businesses.

“Family Bank’s capacity to address the ever increasing financial needs of SMEs is critical hence our multi-pronged fund raising approach – partly for lending activities and also addressing our capacity to serve those needs,” the CEO said.

Earlier in the year Cooperative Bank received Sh10.7 billion from the International Finance Corporation for long term lending while EIB also advanced credit to NIC Bank for lending.

Family Bank is in the process of raising funds through a cash call to investors, the fifth in as many years.