In a conversation with Global Finance, Mark Kerns, head of investor services at Standard Bank, describes how booming interest in Africa, led by South Africa and Nigeria, is reshaping the continent’s capital markets.
Global Finance: How are increasing regulations affecting your operations?
Mark Kerns: We act as a trustee, custodian, securities lending agent, derivatives clearer and more, and work closely with all relevant regulatory stakeholders across the 15 markets in which we operate. We also respond to international regulations that affect our clients, in subcustody services especially. This means a heightened level of due diligence to give them more information for managing local market risk. We have been adding resources to this area.
GF: Is information technology smoothing out the custody/subcustody network?
Kerns: IT is helping us be consistent in the services we provide to our clients. Where possible, we have moved toward common IT applications across the business. In custody, we have a common securities movement and control platform with the exception of one market that will migrate within the next year. The same IT philosophy enables us to integrate other services more efficiently with our overall bank architecture.
GF: What are the newest pricing trends?
Kerns: Some people say there is less competition on price today. I think there is still some. When we look at pricing, we take into account the broader relationship we have with the client, and we’d like the price to be competitive. But we are not focused on the lowest price, rather on the right price for the range of services. As for structure, the core is bundled, whereas out of pocket and ad hoc items are unbundled.
GF: What is the outlook for Africa?
Kerns: With strong GDP and FDI growth and increasing local pension, savings and insurance requirements, rising demand to invest in Africa is driving capital markets’ development. We have clients with exposure to Africa within a global emerging market fund, specialist pan-African structures, unit trusts, ETFs, ETNs (exchange traded funds and exchange traded notes), depositary receipts. There is interest in highly capitalized markets like South Africa and Nigeria and in government bonds, fixed income and equity across the region. Publicly and privately held corporations are coming to market. In smaller markets, demand often outstrips supply, so governments and exchanges are focused on issuance, IPOs and investment programs to broaden liquidity. Clients looking for a wide range of service solutions to match their needs have led us to expand our offering to include accounting, valuation, compliance and performance services—the things you see with global custodians.