After 26 years, CAL Brokers, one of Ghana’s influential players in the securities industry, closed its doors in FY 2022. Being that it was but a subsidiary of a parent bank, it raises legitimate questions about the brokerage business and whether current market providers, with a similar organizational structure, should be concerned about profitability and other prudential measures. The dearth of publicly available data makes this a difficult question to answer. But there may be some signs on the wall that cannot be ignored. Take SBG Securities Limited, for instance, a fully owned subsidiary of Stanbic Bank Limited. In 2018, SBG Securities contributed 0.15% to the Stanbic group’s total income of GH¢797,641,000 within the same time frame, while CAL Brokers was clocking 0.73% contribution. One would argue against such a comparison, citing the ‘apples and oranges’ analogy. Fair point. For one thing, the two have different balance sheet sizes. Also, the uniqueness of each company’s own economics suggests there may be room for strategic maneuver. But to the extent that they both compete in similar markets, with probably similar business models, it raises management concerns about cost competitiveness. The issue of cost management cannot be overlooked, especially against the backdrop of recent bearish investor sentiments on the bourse and its consequent impact on income.
