It looks like the default login shell was
$ echo $SHELL
The list of available shells can be checked using:
$ cat /etc/shells
# List of acceptable shells for chpass(1).
# Ftpd will not allow users to connect who are not using
# one of these shells.
Changed the Login shell to
$ chsh -s /bin/bash
Changing shell for xxxxx.
Password for xxxxx:
/bin/bash as above and relaunching Terminal solved the problem
It is also possible to set the Login shell on the Preferences of the Terminal.app, choosing Shells open with:
Command and adding here the desired shell.