Rwanda Focus (Kigali)

3 February 2013

Rwanda: BK Securities Breathes More Life Into Finance Market

Robert Mathu, the executive director Capital Markets Authority, would wish to have many more companies offering stockbrokerage, investment and finance advisory services in Rwanda.

He is however aware that the heavy investment required in pulling off a business of that nature may not allow in as many players as he would wish to have in the short-term.

So, when Bank of Kigali (BK) recently launched its stockbrokerage firm, BK Securities Limited, Mathu is visibly elated and sees it as a big leap for the capital markets. "It is a blessing," he said in a recent conversation with The Rwanda Focus.

For starters, he says, all the eight brokerage firms are based in Kigali with hardly a presence outside the capital. This means that almost the entire country is not serviced and some potential investors have never been approached.

Therefore, When BK, with a presence in most parts of the country comes into the market, it is easy to see the advantages it brings along with in terms of outreach.

"When we see a well capitalized entity such as BK, coming in and willing to risk its capital, it is good for the capital markets and the country," he added.

In BK, Mathu sees an opportunity to reach many potential investors upcountry through the bank's country-wide branch network.

BK is the largest commercial bank in Rwanda today by total assets and market share--controlling about 32% of the market that has nine active players.

The bank has 58 branches in Rwanda and provides retail and commercial banking services to about 150,000 individuals and over 13,000 legal entities, according to recent figures released by the bank management. It also plans to open representative offices in Kenya and Uganda.

This is in addition to the five mobile vans and hundreds of agents that have taken banking services to many more areas considered not feasible to operate branchs.

Good business

But what is the rational behind listed companies operating brokerage services of their own?

According to Mathu, banks are the leading providers of stockbrokerage services globally because of the nature of their business--that deals with many people with cash. Well capitalized banks also have a wide outreach that brings them in contact with a many people.

In Uganda for example, 90% of stockbrokerage firms are subsidiaries owned by commercial banks. According to Mathu, the same is happening in Kenya where formerly family owned-stockbrokerage companies have been bought off by big commercial banks, most of them listed on the Nairobi Stock Exchange.

There is therefore no conflict of interest in the way in which brokerage firms owned by listed companies conduct their business.

BK Securities Ltd, the 9th such company to be admitted by Rwanda Stock Exchange, will initially offer brokerage services to clients seeking to invest in shares of companies listed on the Rwanda Stock Exchange (RSE). There are four companies listed on RSE, but local companies--BK and beer brewer Bralirwa dominate trading.

Last year saw about 103.5 million shares traded in 1,633 deals dominated by BK and Bralirwa. The bank toped trading with 71,642, 200 shares traded followed by Bralirwa with 31,841,700.

BK Securities plans to spread its business operations to include fund, asset and wealth management. The company is also considering transaction and corporate finance advisory services as one of its product range.

"BK Securities will offer the Bank's customers seamless service consistent with the Bank's customer service. The investing public [has] an opportunity to buy and sell shares or bonds under the umbrella BK brands. The firm will be offering brokerage services for all equities listed on the Rwanda Stock Exchange including Bank of Kigali shares," a statement issued by the company after the launch said.

James Gatera, the chief executive officer of BK, says the launch of BK Securities Ltd gives its customers access to more financial services under one roof.

"This is another big step towards realizing the bank's vision of offering universal one-stop-shop financial services to all its clients. The admission of the stock brokerage firm to the RSE and commencement of business offers our customers' unparalleled access to brokerage services, in addition, to the extensive banking services they currently enjoy," he said.

The business of stockbrokerage firms is to give customers up-to-date advice on equity and bond markets to enable them make well informed and timely saving and investment decisions.

It is therefore possible for an investor who is interested in buying shares in Bralirwa to walk into a BK Securities Ltd and get informed advice on how to go about it.

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