The two want to make a powerful brokerage firm, which is well capitalised with extended branch outreach in and outside the country.
According to Core Securities Chief Executive Officer, George Fumbuka, the bank wants to buy 80 per cent of brokerage firm to strength its competitive edge and extend network outreach.
“The buyout is centred on two folds. The first is capitalisation after coming in of new capital requirement and the second strong branch network - Exim has both,” he said.
He said Core need to reach out to many clients across the country and by merging with Exim Bank, they will increase their outreach using the bank’s outlets, which are around 30 in the country and six others in Comoro, Djibouti and now Uganda.
The CEO said the way of stock brokerage has changed a great deal where brokers units are not only offering services, but also buy shares during IPO, put in stock and sell them once appreciated. He said that was what happened during the Vodacom IPO where around 95 per cent was brought by institutions mostly foreign brokers.
“We need extra fund to facilitate buying shares during IPO … and also the licence fee has gone up in recent days,” Mr Fumbuka, the CEO of the East Africa Best Brokerage award winning in 2013, said.
According to him, previously to open a stock brokerage firm one need just 20m/- but today capital requirement is 500,000 US dollars (1.10bn/-). The Tanzania amount is low compared to Kenya 800,000 US dollars (1.2bn/-), Nigeria 1.0million US dollars (2.2bn/-) and South Africa 2.0 million US dollars (4.4bn/-).
However, the unspecified amount deal would not sail through without the approval of Fair Competition Commission (FCC). FFC on Thursday issued a public notification seeking stakeholders’ opinions of the takeover.
“FCC is currently investigating the intended acquisition in line with the provision of Fair Competition Act 2003 and the Fair Competition Procedure Rules 2013,” the statement said.
Daily News
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