KCB to offer mortgage-backed securities
25 November 2014, 10:52
Nairobi - Kenya Commercial Bank 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 1 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 1 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.
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"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 on Monday at a meeting of African securities exchanges.
Oigara said under the new plan, the bank could triple the amount of mortgages available, and "perhaps go towards the one million mark."
Markets regulator Capital Markets Authority said on Friday 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.