BUSINESS

EBRD and Co-operative Bank of Kenya Sign Currency Swap Agreement

JACKSON OKOTHSep 18, 20261 Mins read275

The Managing Director, Sub-Sahara Africa at the European Bank for Reconstruction and Development (EBRD) Dr Heike Harmgart (second left) with the Treasurer, Co-operative Bank, Ms Mutahe Karuoro, as they received commemorative plaques on Monday 21 September 2026 following the successful closure of the US$ 100 Million Cross-Currency Swap deal.

EBRD (European Bank for Reconstruction and Development) has concluded a US$ 50 Million cross- currency swap agreement with the Cooperative Bank of Kenya that will enable the Kenyan lender to access financing denominated in Kenya Shillings.

This is the first time that the Kenya Shilling Overnight Interbank Average(KESONIA), Kenya’s new reference rate for financial transactions, has been used for such an agreement. It is also the first use of a broader US$ 100million facility agreed between the two institutions.

By using KESONIA in a live market transaction, the EBRD and Co-operative Bank of Kenya are showing how the new rate can work in practice. This will help to build confidence in the benchmark, encourage its use and encourage development of Kenya’s local financial markets.

EBRD to use the swap to lend in local units

The Swap will strengthen the EBRDs ability to raise and manage funding in Kenya Shillings. This will enable the Bank to provide more financing in local currency, helping businesses to avoid taking on unnecessary foreign exchange risk when their income is mainly in Kenya Shillings.

Abdessamad Abouti, Regional Head of Local Currency Portfolio Management at the ERBD, said, “This is an important milestone for Kenya’s financial markets. We have worked closely with local authorities and market participants to support the development of KESONIA, and this swap shows how reforms cam move from design to implementation, reflecting the EBRD’s long standing commitment to developing local capital markets.”

Mutahe Karuoro, Treasurer at Co-operative Bank of Kenya said, “This is a pleasant moment for the Cooperative Bank and for Kenya. Bringing KESONIA to life has been a collective journey-one built on trust, technical rigor and a shared vision for our financial markets. This swap is a first but will not been the last. It opens the door for greater liquidity, better price discovery and stronger participation from local and international investors. We are excited about what lies ahead.”

With Kenya continuing with its transition towards internationally recognised standards, KESONIA-linked transactions are expected to play an increasingly important role in fostering transparent pricing, improving risk management practices and attracting greater participation from domestic and foreign investors.

The EBRD began investing in Kenya in 2025, focusing on private sector development, financial inclusion, sustainable infrastructure and the green transition.