Kenya Commercial Bank set to offer mortgage backed securities

Kenya; Kenya Commercial Bank (KCB), the country’s largest lender by assets, plans to offer mortgage-backed securities on the local bourse to help developers raise funds to build new housing units, its Chief Executive said.

There are less than 30,000 mortgages in the east African nation against a potential of one million, according to the Government, and a severe shortage of houses has driven up prices.

KCB, which also operates in Tanzania, Rwanda, Uganda, South Sudan and Burundi, has previously said it has a target of writing a million new mortgages, in a country where annual demand for housing outstrips supply by about 100,000 units.

The bank, one of the biggest mortgage lenders in Kenya along with Housing Finance, said it was working with the African Development Bank to turn the mortgages into securities.

“It is something we are working on now in the short-term, which means a period of one to three years,” Chief Executive Joshua Oigara told Reuters at a meeting of African securities exchanges.

New plan

Oigara said under the new plan, the bank could triple the amount of mortgages available, and “perhaps go towards the one million mark.”

Market regulator, the Capital Markets Authority, said it was working with two companies that want to start offering mortgage-backed securities to free up space in their balance sheets, allowing them to write more loans, but did not name the companies or give more details.

“Recent research by economists indicates that nine of the twenty fastest-growing economies are in Africa. Strengthening Stock Exchanges to support our Capital Markets Ecosystem, will fuel economic growth. The Nairobi Securities Exchange will continue to work together with other Stock Exchanges strengthening Kenya’s position as East Africa’s financial services hub” said Mr. Eddy Njoroge Chairman of the Nairobi Securities Exchange.

The African Securities Exchanges Association brings together 23 securities Exchanges in Africa with the aim of developing Member Exchanges, providing a platform for networking. Established in 1993.

ASEA works with African Member Exchanges to unlock potential of the African Capital Markets.