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For a financial institution that started in the exclusive domain of the cooperative movement, Co-operative Bank of Kenya Limited has been one of Kenya’s major success stories in the financial sector.

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Co-operative Bank of Kenya

Rapid Growth from Humble Beginnings

The beginnings of the Co-operative Bank of Kenya – simply Coop Bank to many Kenyans – can be traced back to January 1968, when it first opened business as a financial institution under the Co-operatives Department of the then Ministry of Agriculture. From the time of its registration in 1965, the bank had been restricted by statute to serving co-operative societies and unions, but since 1994 serves the entire market, albeit retaining a strategic focus on the co-operative movement.

In 2003 the bank re-occupied its headquarters in Nairobi, Co-operative Bank House, after renovations following the extensive damage by the terrorist bomb blast of August 1998. Despite this major setback, in October of the same year, the Bank signed a contract with MoneyGram International to become an agent of the global company’s funds remittance business. In 2000, the bank became only the second bank in Kenya to interconnect all its branches in order to offer fully centralised banking.

Market Leadership

Coop Bank led the market in pioneering mobile banking in Kenya by launching M-Banking in 2004, a banking service delivered via mobile phones. M-Banking enables customers to access their bank accounts and carry out transactions such as getting bank balances, paying utility bills, registering for salary alerts and loading airtime on cell phones, among others.

Co-operative Bank recently expanded into stock broking by acquiring a 60% controlling stake in Bob Mathews Stockbrokers, now re-named Kingdom Securities Limited. This has enabled Coop Bank to move a step closer towards realization of a financial supermarket model. Coop Bank also operates two whollyowned subsidiary companies, namely CoopTrust Investment Services Limited, which is a licensed Fund Manager and Investment Advisor; and Co-operative Consultancy Services (K) Limited, the capacity-building and management advisory that specialises in providing subsidised consultancy to Kenya’s cooperatives.

Services to Co-operative Movement

With every one in 5 Kenyans being a member of a co-operative, the role of the Coop Bank as an apex financial institution for cooperatives becomes even more critical, as it affects the lives of the majority of Kenyans who directly or indirectly derive their livelihood from the Movement.

Coop Bank continues to enhance the capacity of the movement to offer products through their Front Office Service Activities (FOSAs) thereby reaching every Kenyan household with banking services even in locations that are unattractive to mainstream financial institutions. In addition to the conventional lending and deposit-taking service, Coop Bank is adding value to this relationship by launching Sacco Link, which is an IT supported link that connects the FOSA banking outlets to Coop Bank systems. The bank then issues the Sacco Link Visa debit cards to members of participating cooperatives, thereby enabling them to access their money from any Visa ATM or other Visa accepting outlets worldwide.

Co-operatives to Public Listing

The Cooperative Bank of Kenya was listed on the Nairobi Stock Exchange on December 22 2008, with a public offer of 710.3 million shares at KSh9.50 ($1.3), which raised around US$80 million (KSh5.4 billion). This was a vital boost to the Bank’s capital base, which stood at roughly US$100 million (KSh.7.4 billion) before the offer. The public share offer was made possible through the resolution passed by a Special General Meeting held on June 27, 2008, which approved the change in the status of the Bank from a cooperative society to a limited liability company. Under the new regime allowing for private individuals and corporate bodies to hold a stake in the Bank, its previous shareholding, which was previously limited to cooperative societies and unions, was ring-fenced and placed under Co-op Holdings Co-operative Society Limited as a strategic investor. The bank today has 116,000 shareholders.

Going Regional

Coop Bank is expanding footprint by venturing into the wider Eastern Africa, beginning with Uganda and Southern Sudan. The one feature that distinguishes Coop Bank’s regional strategy from its peers is the adoption of its successful co-operative banking model in the new markets. Already, the Southern Sudan operation will see the bank allocate a 30 per cent shareholding in the proposed Co-operative Bank of Southern Sudan to co-operatives in the new market.

GVP

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