Equity Investment bank goes back to drawing board

Equity Group Director of Strategy and Company Secretary Mary Wamae during Tuesday’s investor briefing in Nairobi. [Wilberforce Okwiri, Standard]

Equity Bank Group’s investment arm, Equity Investment Bank (EIB), is re-evaluating its business five years after re-opening.

The lender’s investment banking division, which had been closed in December 2009 barely two years after starting operations, is again struggling to break even and plans to re-organise the business.

Equity Group Director of Strategy and Company Secretary Mary Wamae said on Tuesday brokerage services were still in operation while the two other services offered by EIB were being assessed for "a decision to be taken".

“In a difficult market, what we do is go back to the drawing board. We are looking at our strategy of investment banking,” she told investors during the release of the group’s half-year results in Nairobi.

“For corporate advisory services and asset and management services sections, we are reviewing the strategy and I think we will make an announcement at the right time,” she added.

EIB ranks among the largest stockbrokers in the country alongside Kestrel Capital, SBG Securities, Renaissance Capital, and African Alliance.

Group Chief Executive Officer James Mwangi played down concerns that EIB may be shutting down. He said the investment bank retains licences for operation but wants to re-look at its business model.

“The licences are still operational, but strategy is something we really need to deeply look at just the same way we have developed a new model for the banking business,” he said. Mr Mwangi told investors that EIB was still sound in the market and that the lender was keen on making it more competitive. In 2012, EIB recruited business club co-ordinators, business advisers, senior underwrites, senior legal advisers, quantity surveyors, and business analysts with the highly regarded Chartered Financial Analysts (CFA) qualifications to help turn around the firm’s fortunes.

When it relaunched in 2012, Mr Mwangi’s strategy was to target small and medium-sized enterprises (SMEs) instead of head-on competition with other big players for large corporates.

In 2008, Equity Bank Group acquired a trading licence from the then dormant Juanco Investment Bank to form EIB and staffed it with key figures, only for it to return a loss of Sh58 million in 2009.

Mr Mwangi has maintained that he wants to reduce reliance on interest income by strengthening other revenue streams in the wake of a limit on how high banks can price their loans.

The bear run that ruled the Nairobi Securities Exchange in 2016 saw many investment firms offering stock brokerage services record losses.