A view of Dubai Islamic Bank, the largest Islamic bank in the UAE/COURTESY
Dubai Islamic Bank to start business in Kenya
Dubai Islamic Bank plans to start operating in Kenya before the end of the year, despite the Central Bank of Kenya’s moratorium on issuing new banking licences, according to sources familiar with the matter.
The largest Islamic bank in the United Arab Emirates will start operating at a time when Kenyan banks have come under closer scrutiny from the regulator because of increasing bad debts, prompting officials and analysts to conclude the sector is ripe for consolidation.
Three medium-sized and small banks have been taken over by the regulator since August last year, with the latest, Chase Bank Kenya, put in receivership earlier this month after a run on deposits.
Last November, the CBK placed a moratorium on the licensing of new commercial banks in an attempt to bring stability to an industry that has more than 40 banks.
But DIB had been in talks with the regulator before then, meaning a decision on its licence would not be affected by the moratorium, the sources said.
DIB is now awaiting the final go-ahead from CBK, said the sources, as it has already been granted outline approval for a commercial banking licence having planned to open in Kenya last year, only to find the process had taken longer than expected.
CBK said in a statement yesterday it was processing an application for a banking licence from DIB, without elaborating.
A separate source at the central bank said DIB is one of the banks expected to start operations in the country this year.
No one at DIB responded to a request for comment.
DIB has already recruited staff for its Kenyan operation, which will initially comprise three branches offering consumer, corporate and treasury services, the sources said.
Kenya will not be DIB’s first foray overseas. It holds stakes in banks in Pakistan, Sudan, Jordan, Bosnia and late last year raised its stake in Bank Panin Syariah, the Indonesian sharia-compliant lender, to 39.6 per cent, according to a presentation on the bank’s website.
It will become the third Islamic lender to operate in Kenya, where Muslims account for about 10 per cent of estimated 44 million people.