Wednesday, August 19, 2009

Co-op wins Discount share custody

Shareholders at the Discount securities limited offices to offload their shares in panic after the firm was placed under the management of auditing firm KPMG. PHOTO/ Fredrick Onyango

Shareholders at the Discount securities limited offices to offload their shares in panic after the firm was placed under the management of auditing firm KPMG. PHOTO/ Fredrick Onyango 

By JUSTUS ONDARI

Investors with the collapsed Discount Securities Ltd have been allowed to transfer their accounts to the Co-operative Bank of Kenya.

The bank’s managing director Gideon Muriuki on Wednesday announced that they had successfully bid for a Custodial Services Tender, which was floated by the Capital Markets Authority (CMA).

Consequently, the bank will take over the about 150,000 CDS accounts previously held by Discount Securities, which was placed under statutory management on March 16 this year.

“This is a key breakthrough in our strategies to grow our non-funded income streams,” Mr Muriuki told an investor and media briefing held at a Nairobi hotel on Wednesday.

The tender is a major boost to the bank’s profile in the stock market in what its management says is an effort aimed at completing its “financial supermarket model.”

“It definitely makes us one of the biggest players in the market,” Mr Muriuki said as he declined to state exactly how many accounts they hold.

This is because the bank, which had a custodial licence with about 70,000 CDS account holders, acquired a controlling 60 per cent stake in Bob Mathews Stockbrokers Ltd in March this year before renaming it Kingdom Securities Ltd.

New manager

Besides the acquisition enabling the bank to access over 12,000 CDS account holders, it also made possible the acquisition of membership of the Nairobi Stock Exchange because it is one of the bourse’s 21 licensed stockbrokers.

The successful tendering for the Discount Securities accounts comes slightly over a month after CMA chief executive officer Stella Kilonzo appointed a new statutory manager for the collapsed stockbroker.

Cash problems

Mr Johnstone Oltetia who was appointed in July replaced audit firm KPMG’s Zahir Sheikh and Mr Peter Kahi.

In October 2008, CMA had appointed KPMG Kenya, as independent executive director.

This was after reports emerged that the stockbroker was facing corporate governance and liquidity problems.

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