Kenya: Bank Allowed to Act As Custodian
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The Nation (Nairobi)
18 July 2008
Posted to the web 17 July 2008
Kaburu Mugambi
Nairobi
The Capital Markets Authority has licensed Prime Bank to operate as an authorised depository.
An authorised depository otherwise referred to as a custodian, is a commercial bank or a financial institution approved by the regulator to hold securities, financial instruments or documents of title to assets.
They could be registered in the name of local, East African or foreign investors or an investment portfolio.
"The application by Prime Bank to operate as an authorised depository was approved by the CMA board on Tuesday," said CMA chief executive Stella Kilonzo, Thursday.
To act as a custodian, a firm must first be licensed to operate as a bank under the Banking Act or as a financial institution. Prime Bank deputy chief executive Amar Kantaria said that the bank had put in place the necessary requirements in terms of experienced technical staff as well as special software to start offering the new product.
"We are ready to provide clients with the ease that goes with outsourcing services of a professional custodian to enable them concentrate on their core business and maximise on revenue generation," he told the Daily Nation Thursday on receiving the approval.
The Retirement Benefits Act requires a trustee of a scheme, fund or a pooled scheme to appoint a custodian who should also open a bank account or banking accounts on behalf of clients. Mr Kantaria said the licence was in line with the bank's pursuit to offer all financial services. "The idea is to have full financial services from loans to more dynamic services like internet banking and now custodial licence all which will put Prime Bank right up there with other leading financial institutions," he said.
A licensed custodian also acts as a Central Depository Agent for the Central Depository and Settlement Corporation Limited. Other authorised depositories are Barclays Bank of Kenya, National Bank of Kenya, Stanbic Bank, Kenya Commercial Bank, National Industrial Credit Bank, Co-operative Bank of Kenya, Investment & Mortgage Bank, CFC Bank, Equity Bank, Dubai Bank and African Banking Corporation.
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