Wednesday, March 26, 2008

STOCKBROKERS,BANKERS...DINOSAURS & EVOLUTION

The dinosaurs were wiped out by a meteorite? Then mammals took over then the hominids..homo erectus, Neanderthal man then us(Homo Sapiens).Twenty years ago the Banking sector had 2 large foreign owned banks(Barclays and Standard Chartered)The other two heavies were Government owned(KCB and NBK).The rest of the banks and Building Societies were family owned i.e. owned by a businessman who lent to his pals/family and kinsmen.

Then the Banking crises of the 1980s and 1990s came along, and a number of the smaller banks folded. The surviving banks were bought by better entrepreneurs, merged and recapitalised.Out of these ashes arose Banks such as EQUITY(formerly Equity Building Society)


Fast forward to 2008.most of the banks are hardly family controlled. The few family owned and controlled banks are small and decreasing by the year through acquisitions.

There's another industry that is structurally in the same position Banking was 20 years ago.-STOCK BROKERAGE.

Most of the brokers are family/individually owned, the sector doesn't have many controls. The firms’ capital bases are small.

My take is that in the next 3 years most of these firms will be taken over by bigger players (read banks) and soon stock brokerage will be an extension of the banking business .e.g. CFC Bank +CFC financial Services, NIC Bank and solid Stocks.

In 3 years there will probably be more brokers licensed i.e. once NSE is demutualised.However,the business will probably be controlled by a few players who will be owned by banks.

7 comments:

coldtusker said...

True dat... now we need better service!

Odegle said...

these guys have worked well for us but now its time we demanded more accountability. the rate of failure is too high

Anonymous said...

OD - you must be kidding. these guyz have not worked well, including th ebigger players; they just might have perfected a way of masking their flaws, but I agree with you more Accountability is a must. And also, they're failing too fast, Reliable Securities, or is it unReliable Securities? Or is it jsut a sore loser tryingto drug their reliable name in the mud?

Swaka in USVI

pesa tu said...

@Coldtusker: For sure
@Odegle: Change is invevitable
@anon:some of us have good brokers

Anonymous said...

Uko wapi?

pesa tu said...

@ everyone: On a sabbatical will be back after June 5th, pole for the inconvenience.

Thanks for the concern.

Robert said...

I think at the end of the day we'll have two different types of players bank owned and independents. The independents will target the top end of the retail sector and some institutional business. The banks will try to get the institutions. If I were a bank I wouldn't go into stockbroking to far away from my core business. As a member of the investing public I'd be abit worried about the changes being proposed they might just go to far and make the whole system unworkable. Anyway at the end of the day owning a stock brokerage will be like owning a butchery offering a commoditised service.