HF seeks nod for custodial services to grow income

Housing Finance (HF) has applied to the Capital Markets Authority for a licence to operate custodial services, joining the list of lenders diversifying their income streams toward non-funded sources.

The company, which is the banking subsidiary of HF Group, says the new services will boost its fees and transaction-based income.

A custodian is a financial institution which holds or trades securities and other assets in electronic or physical form on behalf of customers who are normally high-net-worth individuals and institutions.

Some of the services custodians offer include proxy voting, income collection, settlement of investment transactions, corporate trustees, tax reclamation among others.

“HF is planning to increase its revenue stream through purchase and sales of assets held under custody,” Sam Waweru, the bank’s managing director, said in a statement.

“The firm will earn additional revenues through processing payments and other transactions that result from client investment activities. We have already put in place the necessary infrastructure to rollout upon receipt of the licence.”

The bank has hired Mildred Otieno, a former relationship manager for investor services CfC Stanbic Bank, to head the new unit with other employees set to be sourced internally.

HF joins a growing list of financial institutions such as Equity Bank, KCB Group and Standard Chartered Bank of Kenya that offer the service that is mostly used by foreign individuals and firms seeking to invest locally.

Foreign investors rely on custodians to facilitate their trading of securities listed on the Nairobi Securities Exchange including stocks and government bonds.

Banks are increasingly venturing into investment advisory, custodial services and bancassurance to maintain their profit growth.