Barclays Bank of Kenya stands on the verge of celebrating its 100th anniversary, commemorating the occasion with a host of new services and digital upgrades to bring prosperity to an ever-growing customer base. The bank's history traces from 1916 when the National Bank of South Africa (now First National Bank) opened a branch. In 1925, National Bank of South Africa was merged with the Anglo-Egyptian Bank and the Colonial Bank to form Barclays Bank (Dominion, Colonial and Overseas).
The bank was licensed in its present form in 1953, and in 1978 it was incorporated locally as Barclays Bank of Kenya, a wholly-owned subsidiary of Barclays Bank International. Before 2013, the bank was a subsidiary of Barclays Bank Plc. (through Barclays Africa), an International financial services conglomerate, whose shares of stock are listed on the London Stock Exchange under the symbol: BARC and on the New York Stock Exchange (NYSE) under the symbol: BCS.
In 2013, Barclays Plc adopted the combined strategy to operate as “One Bank in Africa” with an aim of increasing efficiency and boosting returns from the African Units. This led to the merging of all Barclays Plc. businesses in Africa (other than Egypt and Zimbabwe units) through Absa Group Limited, leading to the formation of Barclays Africa Group. The chairman of the ten-person board of directors of Absa Bank Kenya is Charles Muchene, one of the non-executive directors.
The roots of banking in Kenya stretch back to the late 19th century, intertwined with the expansion of European trade along the East African coast, particularly in Zanzibar. In 1887, Sir William Mackinnon founded the Imperial British East Africa Company (IBEAC) with backing from the British Foreign Office. The establishment of IBEAC quickly drew the attention of the National Bank of India (NBI), which entered into an agreement with Smith, Mackenzie & Co., the East African representatives of the merchant company. This partnership enabled NBI to serve as the banking agent on the East African coast, marking the beginning of organized banking in the region.
As trade flourished, the need for reliable financial services became increasingly apparent. The strategic alliance between NBI and Smith, Mackenzie & Co. facilitated the provision of banking services essential for managing the flow of goods and capital. Initially, banking services were a preserve of Europeans and Asians, with Africans having limited access. This began to change in 1910 when the Post Office Savings Bank was established, offering services to Africans, though primarily in urban areas where colonial postal officials were stationed.
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Before these developments, trade in East Africa relied on barter and traditional currency systems like cowrie shells and beads. The introduction of formal currency began with the Maria Theresa Thaler (MTT) in the early 19th century, followed by the Indian rupee with the rise of British trade. The pre-independence era established foundational financial services that facilitated trade and economic growth. The early involvement of the National Bank of India and the strategic partnerships formed during this period were instrumental in shaping the trajectory of Kenya's banking sector, leading to the robust and diverse industry that exists today.
In 1900, the National Bank of India (NBI) secured land in Treasury Square, Mombasa, to construct its building, signaling its growing business. By 1904, NBI opened its first inland branch in Nairobi. The burgeoning economy attracted more banks, prompting the government to enact the first Banking Ordinance in 1910 for regulatory oversight.
Kenya’s change in status to a British colony in 1920 further accelerated bank growth, with Barclays Bank DCO emerging from a merger in 1925. Despite World War II and the Mau Mau uprising, the banking sector flourished, with Barclays Bank staff increasing substantially from 283 in 1945 to 1,163 in 1960. This era also saw the entry of several new banks, including the Algemene Bank Nederland in 1951, Bank of Baroda in 1953, Habib Bank in 1956, and both Ottoman Bank and Commercial Bank of Africa in 1958. The National Bank of India evolved into National and Grindlays Bank in 1958, expanding its footprint across key Kenyan towns.
The establishment of the Central Bank of Kenya (CBK) in 1966 marked a significant milestone in the regulation and stabilization of the country's financial sector. Shortly after Kenya gained independence, the CBK began issuing the first Kenyan currency notes and coins, which started circulating in 1966 and 1967, respectively. These initial coins were in denominations of 1 and 2 shillings and 5, 10, 25, and 50 cents.
Kenya’s first President Mzee Jomo Kenyatta being presented with a set of new currency notes by CBK Governor Dr Leon Baranski on September 15, 1966.
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The first governor of the CBK, Dr. Leon Baranski (who was seconded by the IMF) was instrumental in setting up the regulatory framework for the country's banking operations. One of the first major hurdles came when Tanzania nationalized all commercial banks and imposed exchange control restrictions, disrupting the remittance of funds and financial transactions between Kenya and Tanzania. Another challenge emerged in 1968 during an international gold crisis, which led to the devaluation of the British sterling pound, thus affecting the Kenya shilling. The CBK had to temporarily suspend foreign exchange dealings to stabilize the currency.
This vision materialized on June 19, 1965, when the Co-operative Bank of Kenya was registered as a co-operative society, initially aimed at serving the growing farming community. In its early years, Co-op Bank exclusively served farmers through the co-operative movement, restricting individual accounts, and lacked its own nationwide branch network. The journey of government-owned banks in Kenya began with the establishment of the National Bank of Kenya (NBK) on June 19, 1968. NBK’s establishment was a significant milestone, marking the government's commitment to creating a robust banking sector to support national development.
The history of KCB dates back to 1896 when it was founded as the National Bank of India (NBI) in Mombasa. In 1958, NBI merged with Grindlays Bank to form the National and Grindlays Bank. Following Kenya's independence, the government sought to increase local participation in the banking sector. This led to the acquisition of a majority stake in the National and Grindlays Bank, which was then renamed Kenya Commercial Bank (KCB) in 1970. KCB was created after the government acquired a 60% stake in the National and Grindlays Bank, subsequently splitting it into two entities: Kenya Commercial Bank and Grindlays Bank International (Kenya).
In November 1976, the government took full ownership of KCB by purchasing the remaining 40% stake from Grindlays Bank of London. This move solidified KCB’s position as a cornerstone of Kenya’s banking sector, offering affordable banking services to a broader population. Through fostering economic growth and inclusivity, the formation of these banks accelerated the provision of financial services to the general population.
In the early days, the National Bank of India relied on rudimentary manual weighing scales shipped from London and enormous volumes of books for keeping accounts and legal documents. Transactions were meticulously recorded in passbooks by clerks, and large cash withdrawals required advance notice, sometimes up to three weeks. Cheques, mainly used by companies and wealthy individuals, took over a month to clear in the 1950s.
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The real technological transformation began in the late 1960s when major banks started investing in computers. National and Grindlays Bank led the charge in 1968 with a 16K 1901 ICL mainframe computer, later supplemented by another in 1971. By 1972, Kenya Commercial Bank (KCB) had established its own systems division and adopted the Key-Edit computer system in 1975.
Jyotindra Zaveri was trained to repair this mainframe computer system installed in the Kirloskar Pneumatic Company, Pune, India - 1978 - 1980.
In 1989, Standard Chartered introduced debit cards and ATMs. Soon, other banks like Barclays, KCB, and Co-op followed suit. By the early 2000s, customers could access services from any branch of their bank, and ATMs offered a range of services beyond cash withdrawal. An important landmark was achieved when Co-op Bank introduced mobile banking in 2004, initially for balance checking and statement requests. This was further revolutionized by Safaricom's launch of M-Pesa in 2007, which transformed money transfer and financial inclusion. Internet banking further enhanced accessibility, allowing customers to manage accounts from their homes or offices. This has been facilitated by partnerships with local tech firms specializing in e-payments.
In August 2016, Kenya's President Uhuru Kenyatta signed the Banking (Amendment) Bill 2015 into law, a move initiated by Kiambu Member of Parliament, Hon. Jude Njomo. This legislation, known as the Banking (Amendment) Act 2016, capped interest rates at a maximum of 4 percent above the Central Bank’s Base Rate (CBR) for any credit facility in Kenya. Additionally, it set a ceiling of 70 percent on the interest paid on deposits in interest-earning accounts, relative to the base rate. As the economic challenges resulting from the legislation became apparent, in 2019, President Kenyatta recommended its repeal.
Following the repeal, Kenya’s banking industry pivoted towards developing innovative solutions to enhance credit access for MSMEs. One notable initiative was the Inuka Enterprise Capacity Building Program launched by the Kenya Bankers Association in 2018. This program aimed to de-risk businesses and make them more bankable.
In December 2019, the world received reports of a mysterious disease spreading in Wuhan, China. By February 2020, COVID-19 had traversed borders, reaching various countries worldwide. Kenya confirmed its first case on March 12, 2020, leading the government to implement stringent containment measures, including lockdowns and travel restrictions, to curb the virus's spread. Before the pandemic's onset, Kenya's banking sector was optimistic following the repeal of interest rate capping in November 2019, which promised increased lending to previously under-served sectors.
As the pandemic evolved, it became clear that even resilient sectors like tourism, hospitality, and education needed support. The banking industry quickly adapted the use of digital banking platforms to minimize physical interactions. The Central Bank of Kenya played a pivotal role in introducing fiscal interventions to cushion the economic blow. Key measures included reducing the Cash Reserve Ratio (CRR) from 5.25 percent to 4.25 percent, freeing up liquidity. Bank employees were front-line heroes through renegotiating loan contracts and helping businesses navigate the financial storm. Stakeholders are also working to operationalize risk-based pricing, further promoting credit access and ensuring the sector's stability.
Barclays DCO took a pioneering step in the early 1950s by establishing the first local training school in Nairobi, aimed at building a competent local workforce to support its expanding operations. This initiative led to rapid growth, including the opening of Barclays’ 100th branch in Mandera in 1968. Other banks followed suit, with Standard Bank of South Africa opening a training college in 1958 and Bank of India and Bank of Baroda establishing a joint training school in 1969. The establishment of the Kenya College of Accountancy in 1989 further supplemented banking education, contributing significantly to the industry by producing well-trained professionals.
Despite these efforts, training enough Africans, and especially women, to take over the banking industry was a gradual process. Dr. Mary Okelo became the first African woman bank branch manager at Barclays Bank in 1977. This promotion opened doors for more women to rise to management positions. She later became the director of the African Development Bank and senior advisor to the bank’s president in 1987. Gender equality has not only been confined to employment policies but has also influenced services in several banks. For instance, the Bank of Baroda recently opened an all-women’s branch in Nyali, Mombasa, where the staff are primarily women, and the products are tailored to their women customers.
In 1969, Standard Bank of South Africa merged with the Chartered Bank of India and China to form Standard Chartered Bank (StanChart), while Barclays rebranded to Barclays Bank International. However, political interference and under-capitalization led to the collapse of several banks between 1984 and 1989, prompting the government to pass the Banking Act of 1989.
As a major global financial services provider, the Barclays name is a household one in the majority of the developed world; spreading its engagement in personal banking, credit cards, corporate and investment banking, and wealth management to more than 50 countries around the globe. With the vision and purpose of helping “people reach their ambitions”, the culmination of 300 years’ expertise and history continues to generate largely unrivalled levels of service offering and customer satisfaction as the Company continues to “move, lend, invest and protect” money for customers and clients worldwide.
With 122 branches at present, and 300 supporting ATMs, Barclays Kenya boasts the biggest network in the country among its peers, with much of its expansion occurring in the past eight years; a 50 percent increase taking place since 2007. With a history spanning 99 years, the Company has outlined its plans for significant expenditure and further expansion to celebrate its 100-year anniversary, but this certainly isn’t a rare occurrence for Barclays Bank of Kenya who has invested heavily in the country for the entirety of its existence in the country.
Covering banking segments across “retail banking, business banking, corporate and investment banking, treasury advisory services and markets, Barclays has furthermore played a pioneering role in the local financial services sector as well as on the socio-economic front”. Compartmentalising the Barclays offering even further and the range of products and services available to all demographic of customer is just as comprehensive as any western market, standardising the reputable Barclays portfolio across the board where possible.
Inevitably, regional trends and regulations are adhered to throughout this offering, but the core areas living beneath the aforementioned banking umbrellas are all present. Supporting the staple current and savings accounts is a cast comprising loan options, a mortgage centre, a host of credit card offerings, business banking opportunities, and of course, electronic banking which represents the most rapidly developing of the divisions.
The foundations had already been laid for the positive start to 2015 via a 2014 which saw significant increases across all financial KPIs. Key highlights for the year included net operating income increasing to KES 28.3 billion against KES 27.9 billion in 2013; a six percent reduction in operating costs as a result of effective cost management; a six percent increase in loans and advances to customers; and the net non-performing loans rate standing at three-five percent as a consequence of strong risk management.
Driving such fiscal development for what is evidently already a market-leading Company is no mean feat and emphasises the scale of capital investments and strategic moves that Barclays involves itself in each year to remain fresh, modern and attractive as a banking proposition in Kenya. For 2014, this notion also incorporated a host of new products and services to support the future growth of not just the Company itself, but of its customers and partners as well.
Moving into 2015 and the Bank has picked up where it left off, making significant investments into a number of new revenue streams in order to build upon the success of recent years and to further capitalise on a population eager to embrace the very latest digital solutions. The aforementioned mortgage centre and bancassurance has been complemented in the first half of the year with a new Asset Finance Centre of Excellence, as well as an enhanced push into agribusiness as a new revenue stream in order to boost its overall balance sheet growth.
Complementing its new apps, new service offerings and enterprise support, the Company’s ongoing corporate social responsibility efforts sets the business apart from its market counterparts, involving itself extensively in school and educational programmes as well as in the health sector and all-important rural and farming community.
To facilitate such widespread external prominence, as with any large enterprise, the work that goes on behind the scenes to make internal procedures as efficient as possible is of paramount importance. This is no different for Barclays Bank of Kenya who incorporates its own employees’ satisfaction into its wider dedication to the nation’s population. With more than 3,000 employees distributed across the entire branch network, the importance of standardising hiring, training and retention methods is vital, in order for customers to receive the exact same, high quality service in one corner of Kenya to one in the opposite corner of the country.
To achieve this challenging feat, Barclays adopts both internal and external methods, subsequently bridging the gap between local regulations and considerations, and international standards of service provision. Internally, staff are promoted from within, often from graduate age, engaging them with the Barclays brand and engraining a loyalty amongst its workforce from day one. Training doesn’t just stop there either, as each member of staff is required to move as quickly with the industry trends as their employers are.
The continuous introduction of new products, services and technologies further demonstrates the necessity for such continuous personnel development, and this is similarly complemented by its external training schemes. Leveraging the wider Barclays Group is something that each national arm of the organisation is encouraged to partake in, and the Kenyan division is no different as it sends employees overseas or to other offices on the African continent to garner extra skill-sets ahead of internal service unveilings, or to participate in specific training on new technologies set to enter the Kenyan business.
Inevitably and ultimately judged on tangible results, the Bank’s success can be judged upon the influence perceived within Kenya, but is more typically assessed through its yearly fiscal results, which make for equally impressive reading. In relation to the three month quarter leading into 31 March, 2015, Barclays Bank of Kenya announced a pre-tax profit of KES 3.1 billion, representing a 10 percent growth compared to the same period in 2014.
Fast-forward to the end of June, and half-year results painted an even rosier picture for Barclays, with reported increases amounting to eight percent in post-tax profit for the entire six month period at the beginning of 2015. Looking forward and Barclays Kenya has every reason to be optimistic about even more concerted future growth, as its new initiatives become increasingly engrained into the Kenyan finance domain.
Banking institutions have been fundamental in shaping Kenya’s economy and improving the well-being of millions of Kenyans since before the country’s independence on December 12, 1963. In 1887, Sir William Mackinnon established the Imperial British East Africa Company (IBEAC), which captured the interest of the National Bank of India (NBI). NBI entered an agreement with Smith, Mackenzie & Co. In 1890, Britain declared a protectorate over Zanzibar, and in 1893, NBI set up an office in Zanzibar, marking its foray into East Africa. IBEAC attempted to build a railway from Mombasa to Lake Victoria but ran out of money and labor, leading to its dissolution in 1895. It was replaced by the East Africa Protectorate (EAP), which was more controlled by the British. In 1896, NBI established its first branch in Mombasa, coinciding with the construction of the Mombasa-Kisumu railway.
SIHE 169: Commercial Banking in Kenya. A History from colonisation to digital age, Christian Velasco
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