FEP Holdings to focus on microcredit lending after Credit Bank acquisition snub

Investment firm FEP Holdings has announced plans to strengthen its micro credit subsidiary to offer digital loans.

The move fails the investment firm’s failed bid to acquire a controlling stake in Credit Bank.

FEP Holdings Chief Executive Officer Maurice Korir said this would enable the firm play a role in filling the gap of those who fail to access loans from commercial banks.

FEP Holdings will be strengthening its operations through FEP Credit Services after it installed a core banking system that will help the organization disburse digital loans.

“Our current focus is to develop the existent businesses instead of venturing into new initiatives. This should not be interpreted to mean that we will be static, rather, we are avoiding spreading ourselves too thin,” Mr Korir said.

This will see the investment bank take on the likes of Equity Bank, KCB and Commercial Bank of Africa that have been leading the pack in mobile loan distribution.

Demand for credit has also seen a number of un regulated micro lenders set up shop offering short term loans to borrowers.

Firms such as MyBucks, Tala, Saidia and Branch have over the last two years introduced loan facilities.

While the government capped interest rates charged by commercial banks, micro lenders which are unregulated, offer loans at slightly higher interest charges than banks.

Interest rates range from 11 to 17 percent for mostly one month loans with a limit of Sh100,000.

Mr Koriri said while the industry is highly competitive, FEP plans to attract customers by offering competitive interest rates.

On Wednesday the investment firm announced it would be offloading its five percent stake in Credit Bank after the Central Bank of Kenya declined to authorize its acquisition of a 25 percent stake in the lender.

The Central Bank expressed reservations about the company’s share register and financial capability to adequately capitalize Credit Bank, a fact that caught Mr Korir by surprise.

“We will therefore take another two years to work on other business priority areas before considering this option or any other in the banking sector,” he said.