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Kenya

CfC investment arm raises capital level

NAIROBI, Kenya, Jan 10 – CfC Stanbic Financial Services has raised its capital levels to Sh250 million, in line with the Capital Markets Authority (CMA) requirement that seeks to ensure market stability through well capitalised intermediaries.
 
The firm\’s shareholders injected Sh125 million in paid up capital in December ahead of the CMA directive that came into force on January 1 this year.
 
The firm which holds an investment banking license, capitalised Sh60 million in retained earnings as major shareholder CfC Stanbic Holdings Limited injected a paid up capital of  Sh65 million.
 
"To restore market confidence, we must have strong institutions while as we market intermediaries play our part in reducing the systemic risk posed by weak institutions," said Managing Director Nkoregamba Mwebesa.
 
The move to double its paid up capital positions CfC Stanbic Financial Services among the highest capitalised investment banks operating in the Kenyan capital markets.
 
Mr Mwebesa said the drive to shore up the firm\’s capital levels is part of a proactive strategy to consistently meet the needs of a dynamic market and offer investors a compelling shares trading proposition.
 
"We are now fully capitalised and offer the solid foundation that should be the benchmark for all capital market players," he said.
 
In the 2008/2009 budget the then Finance Minister Amos Kimunya directed that investment banks raise their minimum capital levels from Sh50 million on Sh250 million while brokerage firms were to required to increase their capital levels from Sh5 million to Sh50 million. 
 
The firms were given two years (or until December 31 2010) to comply.
 
The rapid growth at the Nairobi Stock Exchange (NSE) has cast a spot light on the stability of capital market intermediaries with minimum capital requirements considered by many as a bold step towards restoring the integrity of the market operations.
 
The increased activity in the primary and secondary market as well as growth in the number of market intermediaries has presented a litany of risks in the capital market key among them the stability of investment banks and brokerage firms.
 
The capital requirements introduced by the CMA are a reflection of similar proposals mooted in the banking sector that seek to reduce the collapse of financial institutions due to inadequate capital levels.
 
This is expected to foster confidence in the capital markets by achieving an environment in which market intermediaries can fulfil their financial obligations at minimal risk.
 
The CMA sees the minimum capital requirements as a key development in reducing the probability of systemic risk.
 
CfC Stanbic Financial Services recently launched the East and Central Africa region\’s first online share trading platform that has revolutionized how investors buy and sell stocks listed at the NSE.
 
The platform is a global solution that can be accessed from anywhere in the world, even low bandwidth connections.
 

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