In this article, I take you through the list of tier 1 banks in Kenya. Banks! We have put so much faith in these institutions that we almost give them our every penny to save it for us. Banks are beneficial institutions when regulated appropriately, and if not, they can be the most significant pain.
I will take you back when Chase bank’s scandal was uncovered. If you needed to withdraw money urgently, then you would have faced the disappointment of the year.
This is why the central bank of Kenya has come up with a list of Tier 1, Tier 2 and Tier 3 banks. Tier 1 banks in Kenya is what you would wish to call ‘too big to fall’ banks in Kenya.
Currently, there are 42 banks in Kenya which fall under the three categories mentioned above.
While classifying the banks, the central bank of Kenya evaluates their index of net assets, capital, and reserves, customer deposits, number of loans and deposit accounts.
What are tier 1 banks in Kenya?
Tier 1 banks in Kenya are considered to be safe by CBK and control almost 50% of the Kenyan banking sector market share.
According to the Central Bank of Kenya, Tier 1 banks have a weighted index of five per cent and above, Tier banks have an index of between one and five per cent while Tier three banks have a weighted index of below 0 per cent.
In the past few years, a lot has been happening in the banking sector.
Perhaps the most notable one is the interest cap which saw interest rates on loans regulated to a manageable level.
The new no-nonsense Central Bank Governor forced Kenyans to think hard on where they decide to stash their money.
The question of banking is a rather serious one and therefore choosing where to bank your money should be an informed decision.
So far, three banks namely, Chase Bank, Imperial Bank, and Dubai bank are among the few banks that CBK has pointed out as having financial malpractices.
What seems like a vibrant bank could be a disaster in the waiting. The Chase bank case will forever be a reference point where directors were loaning themselves over 1 billion shillings putting the finances of the public at risk.
List of tier 1 banks in Kenya
So with these latest developments, what is the best place to bank your money?
Tier 1 is made up of the big old banks. These will almost certainly never go under similarly as Chase or Imperial.
Tier 1 banks are relatively the safest. Here in Kenya, six banks make up the top tier and collectively control 49.9% of the market. Sixteen other banks make up Tier 2, and together control 41.7% of the market. The last tier, Tier 3 is made up of 21 small banks that control 8.4% of the market.
Here is a list of tier 1 banks in Kenya:
- Kenya Commercial Bank
- Equity bank
- Cooperative Bank
- Barclays Bank
- Commercial Bank of Africa (CBA)
- Standard Chartered Bank
- Stanbic Bank
- Diamond Trust Bank (DTB)
They have millions of clients and hundreds of billions in assets. Think about this, when you go to an M-Pesa Agent, they are probably agents on Equity bank, Co-op Bank, KCB or Family bank.
Why? Because a considerable population has a bank account with one or multiple banks mentioned above. Imagine the situation in Kenyan homes, if Equity Bank went under. With over 8 million customers, that would effectively translate into a revolution and possibly the end of the government.