How to Choose a Bank in Kenya

3 banks have been put under receivership over the last 2 years. It’s safe to say that banking in Kenya has become a high risk venture. How then can you choose the right bank?

CBK classifies banks into tiers. Tier 1 is made up of the big old banks. These will ALMOST certainly never go under in a similar way as Chase or Imperial. They have millions of clients and hundreds of billions in assets. Some have government participation while others are locally and foreign owned.

6 banks make up the top tier, and collectively control 49.9% of the market. The banks are as follows-:

  • KCB
  • Equity Bank
  • Cooperative Bank
  • Standard Chartered
  • Barclays Bank
  • CBA

16 other banks make up Tier 2, and collectively control 41.7% of the market. The most stable of Tier 2 being the following banks

  • CFC Stanbic
  • NIC
  • Diamond Trust Bank
  • I&M
  • Chase Bank
  • Bank of Africa
  • Family Bank
  • Ecobank
  • Housing Finance

The last tier, Tier 3 is made up of 21 small banks that control 8.4% of the market. The following diagram provides a clear picture of the classification.

3.x3 matrix of Kenyan Banks

In June 2015, CfC Stanbic lost top-tier bank classification to CBA after dropping its market share by 0.5 percentage points to 4.92 per cent.

Changes in market share in the banking sector are mainly occasioned by growth in customer deposits as banks deployed various strategies for deposits mobilisation.

CBK has previously put over 3 banks under the Kenya Deposit Insurance Corporation (KDIC) receivership which include the recently troubled Imperial Bank, Dubai Bank and now recently Chase Bank.

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