Victoria Commercial Bank

Debt : March 2022

BIO has granted a USD 10 M loan to Victoria Commercial Bank, a Kenyan commercial bank.

Amount

€ 8,149,300.00

Type of investment

Debt

Development impacts

Local economic growth
Private sector consolidation/innovation
Promotion of ESG best practices
Gender

Beneficiary locations

Africa: Kenya

Investment field

Financial Institutions

Activity

KK.64.190 Commercial banking

Organisation

Victoria Commercial Bank

Website

https://www.victoriabank.co.ke/

Domicile

Kenya

Victoria Commercial Bank (VCB) was initially licensed in 1987 and converted into a full-fledged bank in 1996. VCB serves mostly SMEs (92% of the loan book) with lending and deposit products and a service of private banking quality. The Bank used to be more focused on the manufacturing sector, but is increasingly active in other sectors. The Bank’s structure is supported by a strong governance framework, adequate capitalisation and strong funding and liquidity. VCB has established a strategic nationwide footprint with five operational branches within Nairobi. Through its niche private banking model, comprising business entities and high net-worth individuals, the Bank has attained an award-winning status for customer-centricity.

Today, with only 5 branches, VCB is able to reach clients in more far-flung areas thanks to the current digital services and mobile relationship managers.

Development impacts

Local economic growth
BIO’s investment will be used to grow the SME segment.

Net loans and customers deposited are projected to almost double over the investment period
Private sector consolidation/innovation
VCB is very advanced in digital offering compared to the competition, being part of their strategy to bring the bank to the clients. The omnichannel online banking platform provides many services and VCB also offers a solution that clients can scan cheques at their premises, saving them precious time.

VCB’s fast turnaround time and service quality levels are exceptional in the Kenyan banking sector.

The long-term relationship with the customers, thanks to a strong team with over 13 years of average loyalty and built-up experience, creates a feeling of partnership which makes clients trust VCB for financial and business advice.
Promotion of ESG best practices
Very strong E&S practices with a very exhaustive E&S policy and manual, and a dedicated knowledgeable ESG officer (ESGO), that reviews all loan applications. VCB is an example for this sector.

VCB has the ambition to grow more in the renewable energy sector and wants to support clients in projects that fight climate change. For ‘green’ financing projects (e.g. solar power projects, waste recycling machines etc.) they provide lower pricing to incentivise clients
Gender
VCB qualifies for the 2X challenges as (i) more than 50% of the employees are women, (ii) 2 out of 6 (>30%) senior managers are women, (iii) a woman empowerment program is rolled out in the Bank through a TA of Swedfund, (iii) events specifically for female entrepreneurs are organised by the bank.

The Chair of the BoD is a woman and around 50% of VCB’s SME clients have women in key management positions (CEO, CFO or COO).

E&S Impact

VCB has an HR department of four people and a recently reviewed HR manual, that is mostly compliant with the IFC PS 2 requirements. A few missing items will be integrated by VCB in the year following the investment, as foreseen by the ESAP agreed by BIO and the client.

Current situation

VCB has appointed an Environmental Social and Governance Officer with a solid background and has prepared E&S training material for the rest of the staff. Via the collaboration with other European DFIs, VCB has developed a comprehensive and detailed ESMS, fully aligned to the EDFI requirements for Financial Institutions. It includes a set of ready-to-use tools.

Risk Category: B