The horns sound, the ravens gather. An empire is torn by civil war. Beyond its borders, new kingdoms rise. Gird on your sword, don your armour, summon your followers and ride forth to win glory on the battlefields of Calradia. Establish your hegemony and create a new world out of the ashes of the old.
How to Create Your Own Kingdom in Mount & Blade II Bannerlord
According to many people you shouldn’t be able to do this, but after continuing the main quest for a bit you will be able to create your own faction.
After you ask the nobles about Nerethes’s Folly you get some quests to (spoiler alert) Assemble the Dragon Banner which allows you to create your own faction afterwards.
Prerequisites
1. Be independent, don’t be vassal to another Kingdom
2. Have at least one fief
3. Your Clan must be a certain rank (mine was rank 3)
4. You need to have a certain amount of troops (I had 120)
5. Reach a certain point in the main questline (see General section)