history

World Wars

• World War I (WW1), also known as the First

World War or the Great War
• Was a global war
• from 28 July 1914 to 11 November 1918.
• Had more than 70 million military personnel,
including 60 million Europeans,
• making it one of the largest wars in history
• It is also one of the deadliest conflicts in
history:
• with an estimated:
• 9 million combatants and
• 7 million civilian deaths direct results of war,
• plus other
• 50 to 100 million deaths worldwide genocide
and the 1918 influenza pandemic
• 28 June 1914, Gavrilo Princip, a Bosnian Serb
Yugoslav nationalist, assassinated the Austro-
Hungarian heir Archduke Fraz Ferdnand in
Sarajevo.
• Triple Entente—consisting of France, Russia
and Britain, USA
• Triple Alliance of Germany, Austria-Hungary
and Italy formed on 20 May 1882.
• Kingdom of Romania joined the alliance on 18
October 1883
• World War II, (WW11) also called Second
World War, conflict that involved virtually
every part of the world
• during the years 1939–45
• Axis powers—Germany, Italy, and Japan
• Allies—France, Great Britain, the United
States, the Soviet Union, and, China
• Casualties: The 40,000,000–50,000,000
deaths incurred in World War II make it the
bloodiest conflict, as well as the largest war, in
history
• 1985 - Establishment of the British
Administration in Kenya
• July 1986 - National Bank of India came into
being. first bank ever in Kenya came from
India –1896 established a branch in Mombasa
renting premises from Sheriff Jaffer, Zanzibar
in 1892, Smith Mackenzie
• 1904 National Bank of India opened a branch
in Nairobi.
• 1905 Establishment of Mombasa Currency
Board
• In April, 1909, the East Africa Post Office
Savings Bank Ordinance was passed and
• In April 1910, the Ordinance for the
Regulation of Banks Established or to be
Established in the East Africa Protectorate was
passed.
• The former Ordinance established the first
bank in the formal sense while the latter
enabled the National Bank of India to become
the First Commercial Bank.
• Standard Bank of South Africa came into
being.
• By 1911 there were only three banks:-
• The National Bank of India with branches in
Mombasa, Nairobi, Nakuru and Kisumu.
• The Standard Bank of South Africa having
come in December, 1910 – operating in four
locations: Mombasa (3 branches), Nairobi (2
branches), Nakuru and Kisumu.
• Kathiawad and Ahmedabad Banking
Corporation had a short-lived presence in
Mombasa from 1910 to 1915.
• 1916 - National Bank of South Africa merged
with Anglo-Egyptian Bank Ltd to form
Barclays Bank DCO 1926.
• Till then Standard Bank of South Africa and
Barclays Bank were just branches of British
banks based in London.
• Barclays Bank was, therefore, a merger
between National Bank of South Africa and
Anglo-Egyptian Bank Ltd.
• 1919 - Mombasa Currency Board replaced
with a London based East African Currency
Board (EACB) established to over see the
supply and manage currency issue of British
colonies in British East Africa
• It lasted from 1919 to 1966.
• It was established after Britain took control of
mainland Tanzania from Germany at the end
of World War I, and
• It originally oversaw the territories of Uganda,
Kenya, and Tanzania (excluding Zanzibar).
• Zanzibar joined the currency area in 1936. For most
of its existence, the EACB's main function was to:
i. maintain the local shilling at par with the shilling
in the United Kingdom.
ii. This was done by ensuring that the local currency
was adequately backed by sterling securities.
• It operated out of premises at 4 Millbank, London
SW1, being the offices of The Crown Agents.
• The Board was replaced by the independent
central banks of Uganda, Kenya and Tanzania in
1966.
• 1921 Cessation of the Indian Rupee as a legal
tender
• 1922 East African shilling replaces the Rupee
exchanging at Sh2 a rupee
• 1929 – 1939 - During the Great Depression from
1929 to 1939, there was a gold rush to Kakamega
and in 1934 two bank branches opened in the
town to service the prospectors.
• These branches did not survive and were closed
during the Second World War.
• 1948, banks Expanded to Nyeri, Nanyuki, Kitale,
Kericho and Thompson’s Falls (Nyahururu) with
18 branches as Mombasa, Nairobi, Nakuru and
Kisumu all got representation from the three
banks.
• In 1951, General Bank of Netherlands was set
up, later known as ABN Amro, set up
• In 1953, Bank of India and Bank of Baroda
were set up in Kenya.
• In 1955, the Ottoman Bank and the
Commercial Bank of Africa were established.
• In 1956, Habib Bank (overseas) Ltd was set up
in Kenya.
• 1957: Kisumu Currency Centre established
under East African Currency Board (EACB)
• 1960 The headquarters of the EACB moved
from London to Nairobi
• 1962 Commercial Bank of Africa, which was
registered in Tanzania, then opened a branch
in Kenya.
• In1963, the East African Currency Board
(EACB) published a report advising the three
countries of Kenya, Uganda and Tanganyika to
establish an East African Central Bank to act
as:
• the banker to governments — the bank was
• to provide banking services for the
commercial banks,
• to smoothen financial fluctuations, and
• to function as an instrument of official
monetary policy
• 1965 The first locally owned commercial
bank, the Co-operative Bank of Kenya,
registered under the Co-operative Societies
Act. And in 1968 - Cooperative Bank of Kenya
opened its doors.
• 1966 - The Central Bank of Kenya was established
by an Act of Parliament of March 24, 1966 and
opened its doors to the public on September 14,
1966 at Herufi House. Kenya’s first currency banknotes
issued to the public – denominations 5,10,20,50 & 100.
• The Bank is was anchored in the Constitution under
Article 231. The mandate of the Bank is to:
i. formulate and implement monetary policy that
promotes price stability,
ii. fosters liquidity, solvency and stability of the
banking sector,
iii. issue currency notes and coins, and
Iv. provide banking services to the
Government, commercial banks and other
financial institutions

• 1966: Kenya’s first currency banknotes issued

to the public – denominations 5,10,20,50 &
100.
• 1967 Kenya’s first currency coins issued to
the public – denominations 5ct, 10ct, 25ct,
50ct and KSh.1.
• In 50 years, the Bank has made significant
strides in fulfilling its mandate.
• Successive Boards have seen the Bank grow
from a staff establishment of 60 in 1966 to
over 1,300.
• In response to its expanding functions, the
areas of operation have grown from its head
office in Nairobi to three branches (Mombasa,
Kisumu, Eldoret) and
• three currency centres (Nyeri, Nakuru, Meru).
• In 1968 - National Bank of Kenya was
established and it took over the Ottoman Bank.
Then it became the second locally owned bank.
• The Cooperative Bank opens its doors for
business.
• In 1971 - Kenya Commercial Bank was formed
as a result of the merger between National and
Grindlays Bank International with the
governing owning a stake of 60 percent.
• The Merchant Bank division of Grindlays
merged with Grindlays Bank International Ltd
and formed Stanbic Bank.
• Barclays Bank changed its name to Barclays
Bank International Ltd
• 1972 CBK Head Office (current location)
officially opened by Kenya’s first President
Mzee Jomo Kenyatta
• 1973 The Industrial Development Bank
(IDB) was set up to provide long-term equity
and capital to large-scale and medium
industrial enterprises.
• In 1974, an American bank was formed in
Kenya: National Bank of Chicago and City
Bank of New York were formed.
• It took poll position as the largest of the
country’s commercial banks in terms of
deposits and number of branches.
• 1977 Mombasa Currency Centre operations
taken over by newly established CBK
Mombasa Branch
• 1978 Official opening of CBK Mombasa
Branch by Kenya’s first President the late Mzee
Jomo Kenyatta
• 1981 CBK takes over operations of Kisumu
Currency Centre from KCB
• 1983 Introduction of a crawling peg to
replace the fixed exchange rate system of
1966 – 1982
• 1985 Banking Act (Chapter 488) amended to
introduce an explicit deposit insurance
scheme in Kenya – the Deposit Protection
Fund Board (DPFB)
• 1986 New KSh.200 banknote introduced by
CBK making it the highest denomination in
circulation
• 1988 New KSh.500 banknote introduced by
CBK making it the highest denomination in
circulation
• 1989 Introduction of the first two
automated teller machines (ATMs) by
Standard Chartered Bank Kenya Ltd at its Moi
Avenue branch
• 1991 Elimination of interest rates controls.
• CBK Eldoret Branch begins operations
• 1992 Kisumu Currency Centre upgraded to be
CBK Kisumu Branch and starts operations in the
current building
• 1993 Introduction of a floating exchange rate
regime
• 1995 Introduction of foreign exchange (forex)
bureaus. New KSh.1,000 banknote introduced by
CBK making it the highest denomination in
circulation
• 1996 Non-bank financial institutions (NBFIs)
required to convert to banks.
• 1997 CBK in partnership with Ministry of
Finance establishes the Kenya School of
Monetary Studies (KSMS)
• 2016 Legislation of the Banking
(Amendment) Act that introduced a cap on
lending rates of not more than 4% above the
Central Bank Rate and
• Deposit rates at 70% of the CBR. CBK in
collaboration with the National Museum of
Kenya opens a Numismatic Gallery
• April 2017 - Two new commercial Banks; DIB
Bank Kenya Ltd and
• Mayfair Bank Ltd, were licensed in April 2017
and June 2017 respectively.
• 2017 - DIB Bank Kenya Ltd. is a fully owned
subsidiary of Dubai Islamic Bank PJSC (DIB
PJSC) of the United Arab Emirates (UAE).
• DIB PJSC founded in 1975 is the first bank to
have incorporated the principles of Islam in all
its practices and
• DIB is the largest Islamic Bank in the UAE. This
makes DIB Bank Kenya the third fully sharia
compliant lender to operate in Kenya after:
• Gulf African Bank Ltd and
• First Community Bank Ltd.

• 2017: Mayfair Bank Ltd. established by a

group of local investors to provide banking
services to both the retail and corporate
market segments.
• The services will range from intermediation,
credit extension, trade finance, liquidity
management and custodial solution solutions
to both individual and institutional clientele.
• The banking sector experienced increased
consolidation through acquisition activities.
Acquisition activities during the year include
the:-
• Acquisition of Giro Bank by I & M Holdings Ltd
in February 2017.
• Acquisition of Fidelity Commercial Bank Ltd by
SBM Bank (Kenya) Ltd in May 2017.
• Acquisition of Habib Bank (K) Ltd. (HBL) by
Diamond Trust Bank Kenya (DTBK) in August
2017.
• 1998 Full automation of the Nairobi Clearing
House using the Magnetic Ink Character Recognition
(MICR) technology to facilitate clearing of cheques
• 2002 Going live of Kenswitch – a shared financial
switch consortium of more than 20 commercial
banks in Kenya.
• Electronic Funds Transfer (EFT) payments introduced
to the Automated Clearing House
• 2005 Risk Management Guidelines outlining the
minimum coverage and elements of a
comprehensive risk management programme issued.
• Introduction of the Kenya Electronic Payments and
Settlements System (KEPSS) to help phase out the
paper-based interbank settlement system
• 2006 Minister for Finance cedes
operational supervisory powers of licensing,
revocation of licenses, opening and closing
of places of business and statutory
management to the CBK.
• Enactment of the Microfinance Act, putting
in place the necessary laws and regulatory
framework for the establishment, licensing
and supervision of microfinance banks
• 2007 Introduction of mobile money
system in Kenya
• 2008 The Banking (Credit Reference
Bureau) Regulations issued
• 2009 Enhancement of the minimum core capital
requirements for commercial banks from Kshs 250
million in 2009 to Kshs 1 billion by end of 2012.
Introduction of Agency banking through an
amendment of the Banking Act.
• The Proceeds of Crime and Anti-Money Laundering
Act was passed by Parliament.
• Introduction of cheque value capping to stop the
processing of payments, cheques and Electronic Funds
Transfers (EFTs), of Ksh.1 million and above through
the Nairobi Automated Clearing House.
• Nyeri Currency Centre opened for operations

• 2010 Introduction of Credit Information Sharing

mechanisms. Integration of mobile money with banks.
Nakuru Currency Centre opened for operations
• 2011 Cheque truncation system is
introduced to support the exchange of
electronic cheque images without the
conventional exchange of physical cheques.
Meru Currency Centre opened for operations
• 2012 The Kenya Deposit Insurance (KDI) Act
enacted in response to the need to expand
the mandate of the Deposit Protection Fund
Board (DPFB) as the banking sector’s
resolution authority. Reduction of the cheque
clearing period from T+3 to T+2 days
• 2013 CBK given power to supervise
institutions and their associates on a
consolidated basis and in liaison with
other competent authorities.
• Shortening of the cheque clearing
period to T+1 days.
• Introduction of the East African
Payments system (EAPS) to facilitate
real-time settlement of financial
transactions by the public through
commercial banks in the region using
the five East African currencies.
• 2014 Kenya joins the COMESA Regional
Electronic Payment and Settlement System
(REPSS).
• This eliminated the need for each commercial
bank to use off-shore correspondent banks for
inter-country settlements