By Aduragbemi Omiyale
Investors in the Nigerian capital market who intend to earn more revenue and diversify their investment portfolios now have a huge opportunity to do so through Stanbic IBTC Bank Limited.
The lender has added fixed-income lending to its range of services, providing clients with enhanced opportunities for income generation and increased market liquidity.
Before now, securities lending was popular with equities, but with this new development from the bank, investors can now borrow and lend treasury bills and sovereign bonds for more earnings.
“Expanding our securities lending services to include fixed-income securities provides our clients with broader opportunities to generate income and enhances overall market liquidity.
“This expansion not only broadens the scope of our offerings but also provides our clients with a wider range of assets to optimize their investment strategies and achieve their business objectives, enhancing the overall liquidity and efficiency of the Nigerian capital market. This move underscores our commitment to driving innovation and growth in the Nigerian capital market,” the Head of Investor Services at Stanbic IBTC Bank, Mr Babatunde Majiyagbe, stated.
“Securities lending facilitates continuous trading and liquidity, which are essential for a vibrant market. Our expansion into fixed-income securities will attract more investors and foster a more robust and resilient capital market,” Mr Majiyagbe added.
”In 2023 alone, we facilitated the lending of assets worth N150 million,” he further noted, stating, “This reflects the growing trust and demand for our securities lending services and underscores our role in enhancing market liquidity and efficiency.”
“We are excited about the future and remain committed to driving innovation and excellence in the financial services industry.
“Our goal is to continuously enhance our offerings to meet the evolving needs of our clients and contribute to the overall development of the Nigerian capital market, Mr Majiyagbe disclosed.
He said the inclusion of fixed-income securities in Stanbic IBTC’s lending portfolio represents a significant advancement for the Nigerian capital market.
This is because it opens up new avenues for income generation and liquidity management for investors, positioning Stanbic IBTC as a key player in the evolution of the market.
Securities lending has been available in the Nigerian market for over a decade, with Stanbic IBTC being the only active securities lending agent throughout this period.
The inclusion of fixed-income securities in the lending portfolio is poised to have a transformative impact on the market, contributing to effective market-making, increasing overall market liquidity, and enhancing the efficiency of price discovery mechanisms.
By allowing market participants to take and cover short positions as part of their market-making activity, investment and trading strategies, or for hedging purposes, securities lending supports a more dynamic and liquid market environment.
This development is expected to attract more investors and stimulate further growth in the Nigerian capital market.
Securities lending plays a critical role in effective market-making, and enhancing the efficiency of price-discovery mechanisms.
Business Post reports that securities lending is the market practice of transferring shares for a fee from a holder (the lender) to another party (the borrower), with the borrower agreeing to return the securities to the lender either on demand or at the end of the agreed loan term.
It essentially means that the owner of a share can temporarily loan out his shares to someone else and earn an income that they ordinarily would not have enjoyed if the shares were left sitting in his/her portfolio.
It requires the borrower to put up collateral, whether cash, security or a letter of credit. When a security is loaned, the title and the ownership are also transferred to the borrower.