HF applies for custodial license in bid to tap investments markets

- Custodial license also expected to improve the liquidity position of the firm

HFC, the banking subsidiary of HF Group, has applied to the Capital Markets Authority (CMA) for a license to provide custodial services.

The license will enable the subsidiary play a role in the custodial business that enhances domestic and foreign investments into the local financial markets.

HFC’s Managing Director, Sam Waweru said the firm has already invested in operations, technology and human capital capabilities to roll out its custodial services.

“We have already put in place the necessary infrastructure to rollout our custodial service and we will roll out the services immediately upon receipt of the license,” said Waweru.

The HFC MD said the size of the custodial business in the country has been growing steadily driven by increasing value of assets under custody as well as newer investor classes such as portfolio management services opting for custody services.

“HFC is seeking to provide asset safekeeping and other related custody services to institutional investors, including asset owners, insurance companies, asset managers, and pension institutions, as well as private wealth clients actively participating in capital and money market operations,” said Waweru.

Having a custodial license is expected to significantly improve the financial position of the HFC by unlocking additional non-funded income revenue streams as well as boosting foreign exchange flows for the business. Waweru said the strategy to offer custodial services was also in line with the bank’s strategy of offering a diversity of financial services under one roof.

“HFC is planning to increase its revenue stream through purchase and sales of assets held under custody. The firm will be able to earn additional revenues through processing payments and other transactions that result from client investment activities,” said Waweru.

HFC joins a growing pool of Kenyan and foreign banks involved in custody of securities. The license granted by the market regulator allows companies to offer custodial services to financial market participants including foreign institutional investors and foreign portfolio investors.