Dubai Islamic Bank to crank up rivalry with Kenya branches

Dubai Islamic Bank has started recruiting key managers after it received approval “in principle” from the Central Bank of Kenya to open a subsidiary in the country.

UAE’s largest Islamic banker plans to enter the Kenyan market through a green field operation, with branches in Nairobi and Mombasa, and could usher in formidable muscle in the banking segment.

“The DIB Bank has been issued an approval-in-principle to operate in Kenya and is in the process of completing all the necessary formalities to obtain a full and final banking licence from the Central Bank of Kenya,” said the bank in an advert.

The bank advertised 27 jobs last week among them branch managers, tellers, sales agents, credit analysts and IT administrators.

DIB will become the second international bank to set up green field operation following the entry of Nigerian United Bank of Africa. UBA is yet to record profits six years on.

DIB is targeting the nascent but fast-growing shariah banking driven by wealthy but unbanked Muslims.

READ: Islamic banking poised to reshape financial sector

Currently, there are two fully fledged shariah-compliant banks in the country, First Community Bank and Gulf African Bank. Data from Central Bank of Kenya shows that the two lenders held deposits of Sh29 billion as at the end of last year up from previous year Sh22.8 billion.

Their combined market share stood at 1.09 per cent six years after they stated operations underlining the growth and potential of shariah banking.

Conventional banks have created shariah-compliant departments some including own stand-alone branches such as Chase Bank’s Iman and National Bank’s Amanah. Other lenders that have entered the Islamic banking space include top-tier lenders KCB and Barclays.

DIB is listed in the Dubai financial market with Investment Corporation of Dubai being its largest shareholder at 28 per cent stake. It operates 62 branches in the United Arab Emirates. DIB also operates in Pakistan, Jordan and has a representative office in Turkey.

Kenya has been seen as a pioneer in Islamic banking with some of its neighbours, such as Uganda, currently in the process of passing shariah regulations in the banking sector.

Registration of DIB will see the number of banks in the country rise to 45 with 44 active ones following the suspension of Charterhouse Bank.

Central Bank has recently raised the minimum capital requirement for banks to Sh5 billion from Sh1 billion in a move that could see DIB shareholders pump billions in the subsidiary.