Thirteen counties from Western, Nyanza and Rift Valley regions have set a side Sh2.6 billion for establishing a regional bank.
The counties include Kisumu, Siaya, Homa Bay, Kisii, Nyamira, Migori and Bungoma.
Others are Kakamega, Vihiga, Busia and Kericho.
Lake Counties Economic Block Development Bank chairman and Kisumu Governor Jack Ranguma said each of the counties will set aside Sh200 million for the investment.
He said the financial institution will offer loans at affordable rates.
"We have established a secretariat and I have transferred staff from Kisumu county to run the office," Ranguma said as quoted by the Star as he spoke in Kisumu on Saturday at a meeting with bodaboda riders.
The project, he said, has already been approved by Controller of Budget Agnes Odhiambo.
The bank will be headquartered in Kisumu with a branch in Nairobi.
"We have hired Deloitte to find us a bank interested in a buyout. It is easier to buy an existing bank and change its name, instead of starting a new bank," he added.
"The bank will be an economic pillar of the bloc. The counties also plan to set up two regional referral hospitals in Kisii and Kisumu counties."