America’s biggest bank JPMorgan Chase has overlooked Kenya’s multi-millionaires and high-net worth investors after deciding not to offer asset and wealth management (AWM) services in its upcoming Nairobi office.
The conglomerate, which this week received the approval to open a representative office in Nairobi, reckons it would focus on commercial and investment banking, treasury services, and possibly some lending in Kenya, with its wealth management arm focusing on rich clients in South Africa and Nigeria.
South Africa, Egypt, Nigeria and Kenya have the highest concentration of the dollar millionaires in Africa—a position that has made them attractive to multinational lenders like Standard Bank and Standard Chartered offering wealth management.
As net assets of the rich grow, major lenders have decided to focus on the business of looking after well-heeled clients’ fortunes and earning fees from services such as tax planning, investment management, retirement preparation, and estate planning through trusts and will.
But JPMorgan Chase is looking elsewhere for growth from countries like Kenya and Cote d’Ivoire in the lender’s fresh efforts to advance its footprint on the continent.
The bank was not able to set up shop in Kenya after its home regulator in the United States delayed approvals, stalling the plan to use Nairobi as its launch pad into East Africa for over a decade.
On Monday, the Central Bank of Kenya (CBK) said it authorised JPMorgan to establish a representative office in the country.
Analysts reckon the small share of billionaires in Kenya relative to Nigeria and South Africa was less attractive to JPMorgan, whose assets of more than $4.2 trillion (Sh542.6 trillion) are nearly 43 times bigger than Kenya’s GDP.
Trade finance deals, which are the biggest line of transactions the offices handle, stood at Sh97.1 billion, which, however, represented a decline of 38 percent from the previous year.
Property financing deals rose by 65 percent to Sh62.7 billion, and correspondent banking by 7.2 percent to Sh51.9 billion.
Syndicated finance deals meanwhile remained little changed in the period, coming in at Sh40.3 billion compared to Sh40.5 billion in 2022.
Transactions classified as “others”, which include energy finance, term loans, domestic borrowing, working capital and bilateral receivable discounting, collectively rose one-and-a-half times in the period under review, to hit Sh128.5 billion last year compared to Sh49.2 billion in 2022.
In addition to the new JPMorgan Chase office, there are nine other authorised rep offices in Kenya, established by lenders from The Netherlands, France, China, Pakistan, Egypt, India, South Africa, and Mauritius.
JPMorgan Chase CEO Jamie Dimon will visit Kenya in the coming days and is expected to shed light on the firm’s East African plan.
He told Reuters that the Africa expansion may not have a material impact on the giant lender’s business in the near term, but it will be beneficial for the company in the long run.
