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Understanding the structure of Kenya’s banking industry

Special report courtesy of Banking Survey 2019

The structure of banking industry in Kenya as at December 31, 2018 comprised of 53 financial institutions. Of these, 40 were banks while 13 were micro finance banks. All these institutions are regulated by Central Bank of Kenya. In 2016, Dubai Bank, Imperial Bank and Chase Bank were put under statutory management. Fidelity Commercial Bank was acquired by SBM Group (which later also acquired certain assets and assumed certain deposits with respect to Chase Bank, including 50 branches and a significant majority of staff) while Mayfair, DIB Bank got new licenses to operate as commercial banks in Kenya.

Commercial banks are grouped in tiers, while micro finance institutions are tiered in large, medium and small. Central Bank of Kenya determines bank’s tiering based on the weighted composite index comprising assets, deposits, capital, number of deposit accounts and loan accounts. A micro finance bank is classified large if it has a market share of 5 per cent and above, medium if it has a market share between 1 per cent and 5 per cent and small if its market share is less than 1 per cent.

Tier One Banks (>Ksh 150B):

Kenya Commercial Bank (KCB), Co-operative Bank of Kenya, Equity Bank, Barclays Bank of Kenya, Standard Chartered Bank, Commercial Bank of Africa & NIC (both now NCBA), Stanbic Bank, Diamond Trust Bank and I&M Bank.

Tier Two Banks(Ksh 50-150B):

National Bank of Kenya, Citibank, SMB, Bank of Baroda, Family Bank, Housing Finance Group, Prime Bank, Ecobank and Bank of India.

Tier Three Banks(KSh 15-50B):

GT Bank Kenya, ABC Bank, Gulf Bank Kenya, Victoria Commercial Bank, Development Bank of Kenya, Sidian Bank, First Community Bank, Consolidated Bank, Guardian Bank, Habib A.G Zurich and Bank of Africa.

Tier Four Banks(<KSh 15B):

SBM (Fidelity Bank), Jamii Bora Bank, Spire Bank, Paramount Bank, Trans-National Bank, Credit Bank, M Orient Bank Ltd, Middle East Bank, UBA Bank, DIB Bank and Mayfair Bank.

Before the share swap deal by KCB on National Bank of Kenya, there were three publicly owned banks; National Bank of Kenya, Development Bank of Kenya and Consolidated Bank of Kenya.

Privately owned banking institutions are further classified into two: locally controlled and foreign (over 50% foreign ownership) owned. Of the 25 locally owned banks, 24 are commercial banks while one is mortgage finance company. All the 15 foreign controlled banks are commercial banks.

Microfinance Banks

The large microfinance banks include: KWFT, Rafiki and Faulu while the medium ones are: SMEP, REMU. Small microfinance institutions are: SUMAC, Century, Uwezo, U&I, Daraja, Choice and Caritas.

Image: Courtesy.

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