Faida hires Mbaru firm bond traders as rivalry hots up

Faida Investment Bank (FIB) has poached bond traders from Dyer & Blair to boost its earnings as competition intensifies in the lucrative brokerage segment.

The trading duo of Norris Kibe and Gibson Gichaga – who joined Dyer & Blair fixed income trading desk four years ago – have moved on to Faida in a move that is likely to spark another round of poaching among stockbrokers.

“We are trying to see how by having them we can grow our business,” said Faida Investment Bank managing director Bob Karina.

The pair was seen as key to Dyer and Blair’s — which is chaired by businessman Jimnah Mbaru — holding on to the pole position in bond trading for the last three years after rising to the helm in 2012, a year after they joined.

Dyer & Blair has, however, been dethroned by Kestrel Capital from the helm of bond trading according to the latest data from Nairobi Securities Exchange (NSE) for the six months to June.

The rise of Kestrel Capital follows its poaching of staff Alex Muiruri and Mathangani Kariuki from competitor African Alliance last year.
Kestrel Capital commanded 22.05 per cent of the bond market compared to Dyer’s 19.7 per cent as per the June NSE data.

On the other hand, African Alliance saw its market share shrink by more than half to 3.5 per cent in June this year from 8.4 per cent at the end of last year.

The relationship-based nature of the business often means when brokers and analysts move they take their business or clients with them.

This has resulted in stockbrokers not shying away from opening cheque books to woo star talent that can attract business, especially from institutional and high-net worth investors.

READ: Kestrel raids rivals in fresh round of talent war among investment firms

A survey by consultancy Ernst & Young released last year attributed the perennial poaching among financial institutions to a lack of investment in developing and nurturing talent, which has increased competition for the talented staff available.

This means that Dyer & Blair could still hunt for experienced traders in the market as bond trading talent is rare in the market.

As at June, Faida controlled 7.6 per cent of the bond trades a drop from 13.9 per cent it controlled five years ago. The brokerage traded bonds worth Sh28.4 billion in the six months to June.

It ranked fifth in market share down from fourth position last year after it was overtaken by SBG Securities. SBG, a subsidiary of CFC Stanbic bank, doubled its market share in the six months to June to 14.8 per cent.

Attempts to contact Nkoregamba Mwebesa, managing director of SBG Securities, to comment on the sudden surge in business were not successful as he did not answer our calls.

Bond dealers earn trade commissions of up to 0.024 per cent of the transaction, though they are also known to give substantial discounts to clients.

The licensing of commercial banks as securities traders is, however, causing jitters among stockbrokers who stand to lose a substantial share of their revenue.

Mr Karina argued that introduction of the banks in the market would kill the price discovery process for the traded securities as they could be coming into the market having agreed on trading terms.

Banks are the largest holders of the Treasury debt instruments, underscoring the fears of the securities market intermediaries.