Business Daily (Nairobi)
James Makau
15 February 2008
Nairobi — Mortgage financier, Housing Finance, has entered into an agency agreement with Faida Investment Bank to buy and sell shares at the Nairobi Stock Exchange.
Under the agreement, Housing Finance will act as an agent for Faida Investment Bank on behalf of investors countrywide.
This is the latest arrangement of its kind involving a bank and brokerage firm, that seeks to tap into Kenya's rural investing population ahead of the land mark Safaricom IPO and private investment company, Trans-Century Ltd's initial public offering expected sometime this year.
Arrangements of a similar kind have also been witnessed with Suntra Investment Bank and Post Bank teaming up, as well as a partnership between National Bank of Kenya and Standard Investment Bank. This allows investors to carry out their trading at the counters of any of the banks in all their branches countrywide.
Frank Ireri, Housing Finance managing director, said the agreement is part of the company's strategy of integrating financial services under one roof in a bid to attract new clients in an increasingly competitive lending environment.
"What will emerge from our integration process is a financial supermarket offering a wide assortment of financial services," said Mr Ireri.
He added that the partnership will enable Housing Finance clients to take advantage of several upcoming IPO's.
The Safaricom IPO , in particular with its anticipated nationwide participation has continued to ignite brokerage players into action, with a number already having set up shop in the country's major towns.
The sale of Safaricom was expected to involve two million investors from across Kenya estimated to be eyeing to own a piece of the region's most profitable company. Housing Finance currently has 10 branches, four of which are in Nairobi and six in Mombasa, Thika, Nakuru, Nyeri, Kisumu and Eldoret.
By using agents, brokerage firms are able to reduce costs that may arise from operating a physical branch and reap from the local agent's knowledge of a particular market.
But the lack of expert knowledge on the intricacies of stock trading by agents in areas outside Nairobi has limited the use of agents, making bank-brokerage partnerships favourable.
Faida's managing director Bob Karina said the company has opened a collection account with Housing Finance in which its clients shall be directed to deposit all monies received with orders to buy and sell securities in whatever form.
Clients will have the option to receive their sale proceeds through their accounts held at Housing Finance.
Mr Karina said the agreement will offer convenience and efficiency for consumers who henceforth will not have their money continually shifted from one institution to another.
"For Faida, an all encompassing relationship with the consumer is more profitable than handling just one aspect of a customer's financial needs," says Mr. Karina Faida was recently granted a license by the Capital Markets Authority to operate as an investment bank.
The license expands the company's mandate from merely buying and selling shares to offering financial services such as advisory services on public offering of securities as well as promoting and acting as a fund manager of collective investment schemes.
Faida has two branches in Nairobi and two others in Mombasa and Thika.
Several existing firms have recently started their own initiatives in taking stock brokerage services to the people largely through agents, while others have opened representative offices in towns proximate to Nairobi like Thika, Limuru and Machakos.
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