Yemisi Izuora
The Stanbic IBTC Bank Limited, the leading custodial and investor services company in Nigeria, has extended its securities lending services by including fixed-income securities.
This significant development marks a new milestone in the Nigerian capital market, providing clients with enhanced opportunities for income generation and increased market liquidity.
With this development, institutional clients, both local and international, can now borrow and lend not just equities but also fixed-income securities such as Federal Government Bonds and Treasury Bills, offering them greater flexibility and diversified investment options.
Babatunde Majiyagbe, Head, Investor Services at Stanbic IBTC Bank Limited, highlighted the importance of this development, stating, “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.”
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.
Majiyagbe explained, “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.”
Stanbic IBTC has consistently been a trailblazer in the Nigerian financial market. In 2015, the bank facilitated the first securities lending transaction in Nigeria, and since then, it has remained the most active participant in this space. The recent extension of services to include fixed-income securities is part of Stanbic IBTC’s broader strategy to provide comprehensive financial solutions and support the growth of Nigeria’s capital market.
“In 2023 alone, we facilitated the lending of assets worth 150 million naira,” Majiyagbe noted. “This reflects the growing trust and demand for our securities lending services and underscores our role in enhancing market liquidity and efficiency.”
The inclusion of fixed-income securities in Stanbic IBTC’s lending portfolio represents a significant advancement for the Nigerian capital market. 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.
“We are excited about the future and remain committed to driving innovation and excellence in the financial services industry,” Majiyagbe concluded. “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.”