Showing posts with label Stockbrokers. Show all posts
Showing posts with label Stockbrokers. Show all posts

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.