Barclays finalizes sale of custody unit to StanChart

Barclays Bank of Kenya has finally concluded the transfer of its custody services business to Standard Chartered Bank Kenya effective from October 31st. The proceeds of the transaction, valued at Kshs 3.5 billion, will be re-invested in the bank’s business and help improve shareholder earnings. The funds will also be used to upgrade the bank’s core banking platform to a level that will support its future growth.

This move is expected to raise the stakes in the lending market as the industry’s players such as Kenya Commercial Bank, Standard Chartered, Housing Finance and Family Bank have all intensified their expansion and fund raising plans.

Barclays PLC exited the global custody business outside Africa in 1998, and the lack of a global operation made the African custody business less competitive and denied it synergies, prompting it to sell to StanChart, which had similar businesses in other market such as Asia and Middle East.

If the funds flow to Barclays lending business, this would give the bank access to cheap fund that will allow it to offer competitive lending rates in the increasingly competitive loans market or boost its interest margins.

This comes at a time when local banks are facing shrinking interest margins, the difference between lending and deposit rates, because of the drop in lending rates in the first half of the year. Lending rates fell by between 1.5 and 3.5 per cent as they race to get a firm grip of the lending market with the recovering economy making consumers less wary of borrowing as lenders loosen their purse strings.

With the blue chip banks - such as KCB, Equity Bank and CFC Stanbic - having announced plans to deepen their entry in the lending business, Barclays Bank has renewed its focus on the lending market, especially on personal loans market and mortgage business, amid rising economic optimism that has dimmed fears of high defaults among salaried workers.



Dyer and Blair

Nakumatt Acquires Uganda's Payless Supermarket

Nakumatt Holdings has acquired three branches of a Kampala-based Payless supermarket for 52 million shillings. Nakumatt took over the three branches in Bugoloobi, Bukota and Kabalanga.

Kenya’s leading supermarket chain recently snapped Payless Supermarket’s three branches in Bugoloobi, Bukoto and Kabalagala, in a transaction valued at $650,000 (Sh52 million).

Nakumatt has retained 80 former payless employees and they are doing infrastructural improvements to bring the premises up to Nakumatt standards.

Nakumatt opened its first store outside Kenya in Kigali in 2008. Nakumatt has over 23 stores in major towns in Kenya.

Safaricom Gets Nod To Acquire ICT Firms

Safaricom is set to gain a larger share of internet and data market after Finance Minister Uhuru Kenyatta gave Safaricom the go ahead to acquire IGO wireless and Instaconnect.

Safaricom had expressed its desire to buy the two firms in July, but lack of regulatory approval held back the closing of the deal and the integration of the companies into Safaricom's operations. 

IGO Wireless is a licensed public Data Network Operator engaged in the operation of fixed wireless data services while Instaconnect limited is licensed as an Application Service Provider engaged primarily in the integration of data solutions.

Both companies are active players in the ICT market and their acquisition is pursuant to Safaricom's stated strategic objective of enhancing their ability to grow their data business.Both companies are under one management and operate from Westlands on the outskirts of Nairobi’s Central Business District.

Already, Safaricom has created a new department-Strategy and New Business Development — whose functions includes searching for buyout opportunities, mostly in the data market, which underlines its desire to grow its data business to help cushion its business from the tough competition in the cut-throat voicemarket.

Safaricom’s first acquisition was a 51 per cent stake in One Communications — a Wimax services provider in August 2008.