The History of the Banking Sector in Kenya: An Evolution in History

The banking sector in Kenya is ever evolving. Despite the numerous economic challenges that have been witnessed within the sector, the industry remains strong and vibrant. At the moment, three banks have been placed under receivership with only one having recovered and back to operations. Kenya currently has 44 banks. 31 of the banks are locally owned while the remaining 13 are foreign owned. Among the 31 locally owned banks, the government of Kenya has a shareholding in three of them, 27 of them are commercial banks and one is a mortgage finance institution, known as Housing Finance.

When did the banking journey in Kenya start?

The treacherous financial journey in Kenya dates back to the colonial times. The British Empire declared Kenya a British Sphere of Influence and established the East African Protectorate in the year 1865 and officially declared Kenya as a colony in the year 1920. During that 19th Century, the East African region engaged in trading activities and there was need for the use of currency. That was when the revolution in the banking sector kicked off.

In 1986, a year after the establishment of the British Administration in Kenya, National Bank of India came into being. Many people think that the British were the first people to establish banks in the country but the first bank ever in Kenya came from India; National Bank of India.

In 1910, Standard Bank of South Africa came into being. Six years after coming to Kenya, the National Bank of South Africa merged with Anglo-Egyptian Bank Ltd to form Barclays Bank. Barclays Bank was, therefore, born in 1910 as a merger between National Bank of South Africa and Anglo-Egyptian Bank Ltd. In 1951, General Bank of Netherlands was set up. In 1953, Bank of India and Bank of Baroda were set up. In 1956, Habib Bank (overseas) Ltd was set up.

In the year 1955, the Ottoman Bank and the Commercial Bank of Africa were established. Cooperative Bank of Kenya opened its doors in the year 1968. In 1968 National Bank of Kenya took over the Ottoman Bank. In 1971, Kenya Commercial Bank was formed as a result of the merger between National and Grindlays Bank with the governing owning a stake of 60 percent. The Merchant Bank division of Grindlays was merged with Grindlays Bank International Ltd and formed Stanbic Bank. 1971 saw Barclays Bank change its name to Barclays Bank International Ltd while in the year 1974, National Bank of Chicago and City Bank of New York were formed.

The Merchant Bank division was incorporated into a new bank, Grindlays Bank International Ltd, which has changed to Stanbic Bank. In 1971, Barclays Bank (DC) changed its name to Barclays Bank International Ltd and became a wholly owned subsidiary of Barclays Bank Ltd based in Britain. In 1974, the American Banks were established in Kenya i.e. first National Bank of Chicago and first National City Bank of New York.

How long these eleven banks have been in operation in Kenya

Barclays Bank of Kenya has been in operation in Kenya for 97 years, CFC Stanbic Bank has been up and kicking for the last 58 years, Diamond Trust Bank Kenya has been breathing the atmosphere in Kenya for 70 years while Equity Group Holdings Ltd has been in existence for 32 years.

Housing Finance has been in Kenya for 51 years, I&M Holdings for 44 years, Kenya Commercial Bank for 41 years under the brand, National Bank of Kenya for 53 years, NIC Bank of Kenya for 57 years, Standard Chartered Bank for 47 years while Co-operative Bank of Kenya has been into existence for 51 years though it went public as a bank in the year 2008.