JP Morgan Chases African Expansion in Kenya: What do Representative Offices Do?

JP Morgan chase & co, the largest US bank recently announced plans to open a representative office in Kenya under the name JP Morgan Chase Bank N.A. representative office Kenya.

This is after receiving approval from the Central Bank of Kenya (CBK).

This move is expected to further solidify the bank’s African expansion which began in the 20th century.

JP Morgan African Expansion: The story so far

According to the bank’s website, JP Morgan’s first foray into Africa came in 1959 when a branch of Chase Manhattan bank was established in South Africa under the name of “Chase Manhattan bank (South Africa) Ltd.” with offices in Cape Town and Johannesburg.

In 1994, JP Morgan led a group of investors on a firsthand look at opportunities for investing in public debt, equity, and private placement issues by the new South African government, private and state-owned companies, and nongovernment development agencies, and in 1995, chase Manhattan Bank reopened its representative office in Johannesburg before a new representative office was opened in 1997 under the name “JP Morgan” .

The company, through its lending and public equity offering, funded numerous projects in South Africa while also providing funds for black-owned businesses in the country in the form of soft loans and grants.

Jp Morgan And Nigeria

In Nigeria, the story is not much different as JP Morgan Chase came into Nigeria in 1960 when a subsidiary of the Chase Manhattan Bank, Chase International Investment Corporation, emerged as the lead partner in organizing Nigerian Textile Mills in Lagos, a year later in 1961 a chase Manhattan bank branch was opened in Lagos to offer commercial banking services to businesses and individuals.

However, it was not until 1982 before a representative office of Chase Manhattan bank (JP Morgan ‘s predecessor) was opened in Nigeria to offer asset management, wealth management and investment banking services to members of the upper echelon in the society.

The wide range of lending services offered by the bank over the years has grown the bank’s clientele in Nigeria to encompass commercial banks, government parastatals, private individuals etc. as well as serving as an advisor to the central bank of Nigeria. 

The recent approval of a representative office in Kenya is twelve years in the making even as the bank seeks to make more inroads into the African continent.

What do Representative Offices Do?

A representative office is a liaison of a foreign bank whose sole objective is to market the products and services of its foreign parent as well as serve as liaison between its foreign parent and local banks, an affiliate of the foreign parent, other financial institutions, private companies and the general public.

Representative Offices are usually set up in countries where branch offices or subsidiaries are not required for the foreign firm.

The functions of representative offices as stated by the Central Bank of Nigeria can be summarized as follows:

1. Market research: representative offices are generally established by financial institutions as an advance party to research into the feasibility of doing business in the countries where they are located. They generally set out to find out the needed information on the local markets as well as assess its viability for the commencement of full-scale business operations.
2. Negotiating with local companies and government officials: Representative offices negotiate with local businesses and government officials on behalf of their parent company. They also partner with governments to carry out certain economic activities.
3. Distributing products/services through local distributors: Representative offices liaise with local banks to get product offerings such as foreign currency-denominated loans, bonds and other forms of equity across to ordinary citizens, top business organizations, and government agencies.
4. Liaison: Representative Offices serve as a liaison between the foreign parent and local banks, private institutions within the country and other customers of the foreign parent based in the country.
5. Information Assistance: representative offices assist exporters in the country where they are domiciled with information on the laws and markets of countries where the parent company or any of its affiliates has a subsidiary. This can be in the the form of organizing seminars, forums and other activities.
6. Investment opportunities assistance: representative offices bring customers of its foreign parent company up to speed with investment opportunities available in the country where it is domiciled, which helps drive foreign direct investment.

What do you need to know?

JP Morgan CEO Jamie Dimon is expected in Africa later this month, with visits to Kenya, Nigeria, South Africa, and Cote d’Ivoire scheduled on his African tour.

This trip is expected to coincide with the opening of the Kenyan representative office, which could offer a pathway to east Africa and further strengthen the bank’s influence and footprints on the African continent.

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