27th September, 2016
An increase in merger and acquisition activity as well as a steep rise in innovation is likely to be the more immediately apparent outcomes of the new interest capping law. This is according to a report by Britam asset managers who also hold that small banks are likely feel a great pinch due to their limited access to funding, while working towards implementing the recently enacted law. According to the report, smaller banks lack relatively unlimited access to finance, unlike the larger banks, which enjoy an estimated 70% of market share. Among the many changes likely to affect smaller banks include lower margins earned from lending and lower return on equities, based on the threat to market share and margins. Kenneth Kaniu, CEO, Britam asset manager says that smaller banks would have to solely rely on the central bank rate in order to earn from lending, pay higher rates on deposits, as they do not benefit from economies of scale. Britam reiterates th