Kenyan banks have been reorganizing their operations significantly with respect to property financing and mortgages. Two banks have indicated their intentions to do so based on the changing face of real estate investment in Kenya. It is our view that these moves will affect how you will approach real estate investment or mortgage financing as we shall note below.

Housing Finance

Housing Finance has undergone a restructuring program which will affect its property and finance services. An approval by the Central Bank of Kenya will see the formation of Housing Finance Group Limited as a non-operating holding company. The Housing Finance Group Limited will be headed by the current Housing Finance Managing Director, Frank Ireri as the Group Managing Director. The mortgage services will be run under a subsidiary HFC Limited which will be headed by Sam Waweru.

A non-operating holding company is a company that only invests money in its subsidiaries but it does not get involved in the daily operations.

Reasons for the reorganization of the housing finance institution include:

  1. Need to strategically place its financial services for growth
  2. The structure will make it easy for the Housing Finance Group Ltd to go about acquisition and investment more effectively
  3. Branding – HF Group, according to the Group Chairman Steve Mainda, is “no longer a mortgage company”. Instead, Housing Finance Group Ltd is a “financial and property powerhouse” that will offer “banking, financial, property and investment solutions.
Frank Ireri HF

Housing Finance MD, Frank Ireri

The KCB Bank Group

The KCB Bank Group, at the same time, is planning to create an independent subsidiary out of its wholly owned mortgage subsidiary, S&L.

Savings & Loan Kenya Ltd was formed in 1949 before KCB bought 100% of its shares in 1972, consequently making S&L a wholly owned subsidiary. Until 2009, the sole activity of S&L was to provide mortgage finance products. Later, in 2009, KCB Bank Group was allowed to integrate its banking services with S&L’s mortgage services that saw the merger take place on January 1, 2010 with S&L becoming KCB’s mortgage division, thereby ceasing to be a subsidiary.


In July this year, Joshua Oigara indicated that there are plans to turn S&L into “an independent entity of the company that builds affordable houses.”

Reasons for the formation of an independent subsidiary by the KCB Bank Group include:

  1. Demand for affordable housing -KCB Bank Group intends to use the subsidiary to put up 10,000 affordable houses over the next three years. The proposed S&L subsidiary will focus on building these houses
  2. Capital – S&L was integrated into KCB at a time when it was performing dismally, unable to raise its own capital. Oigara, the Group CEO, indicates that this move will enable S&L to raise its own capital for investment purposes.
  3. Mortgage Loans – KCB’s mortgage book is estimated to be 14% of its total loans.

What all these mean

In the case of KCB Bank Group, S&L will become the property development arm. The same way the Kenya Building Society (KBS) serves as the property development arm for Housing Finance (HF). It will be in charge of KCB Bank Group’s property development such as housing schemes targeting the middle and low-income brackets.

It is our view that houses will be sold at prices that are below market prices due to the economies of scale enjoyed by the bigger company. So the ordinary Kenyan can easily be able to buy a house at around Kshs 4 million as planned by the company. This way, it will be easier for you to access both financing and affordable housing from the same group.