Nigeria’s second-largest lender, Zenith Bank, has opened talks for an acquisition that will see it enter the Kenyan market, deepening the foray of banks from the West African nation that are keen on expanding their presence in the East African region.
The Business Daily has established that Zenith Bank is in talks with a tier-two lender in the Kenyan market with its top leadership expected to jet into Nairobi within the next three months to advance discussions on the planned purchase.
The multinational’s move comes after recent legal changes that have drastically raised capital requirements for banks from the current minimum of Sh1 billion, prompting scores of small and medium-sized lenders to lay plans for raising funds, including through sale of stakes to strategic investors.
“Kenya makes for an attractive proposition that we have been keen on for a while. We have followed the latest developments around capitalisation and think it presents a good opportunity for us in our Pan-Africa expansion drive. Nigeria has also undergone similar recapitalisation changes and we feel we are among those best positioned to take a position on Kenya,” a source privy to the acquisition plans said.
Zenith is Nigeria’s second-largest bank both by asset base and market capitalisation. The latest valuation at the Nigerian Securities Exchange shows that Zenith held Sh2.52 trillion worth of assets as at the close of 2024 and a market capitalisation of Sh196.95 billion.
Its planned acquisition comes at a time when the Central Bank of Kenya (CBK), in changes through the Business Laws (Amendment) Act of 2024, has raised the core capital requirements for banks in a bid to create stronger and better capitalised institutions in the market.
By the close of 2025, banks are expected to be compliant with the new minimum core capital requirement of Sh3 billion, from the previous Sh1 billion, with the amount expected to be progressively scaled up to Sh10 billion by 2029.
CBK Governor Kamau Thugge on March 25, 2025 told the National Assembly that the market regulator had given 24 out of the country’s 39 banks until April 1, 2025 to submit their plans for capital raising to comply with the new prudential guidelines.
“We need strong banks. The banking sector is facing too many risks and it needs a strong capital base in order to address and mitigate those risks,” Dr Thugge said.
“The transition plan entails a five-year transition period from 2025 through 2029 with banks gradually increasing their core capital to Sh10 billion by 2029 with the phased approach designed to allow for a smooth transition. As of December 2024, 24 out of the 39 commercial banks had core capital below Sh10 billion.”
On March 23, 2025, Ecobank became the first lender to disclose capital injection given the enhanced core capital requirements, with the Togo-based parent entity, Ecobank Transnational, pumping in $27.0 million (Sh3.5 billion), shoring up the Kenyan subsidiary’s total capital to Sh8.5 billion.
Other banks have indicated they are exploring alternative capital-raising plans.
Family Bank, for example, plans to go public by listing at the Nairobi Securities Exchange in 2026, coming on the back of a rights issue in 2023.
The CBK has also lifted the decade-long moratorium on licensing of new banks effective July 1, 2025, a pointer to keen interest by the market regulator to welcome new entrants into the playing field.
If it actualises the acquisition, Zenith will finally be adding a jurisdiction outside its home turf of West Africa to its Pan-African footprint given its presence currently in Ghana, Sierra Leone, the Gambia, and Nigeria.
Zenith will be the fourth Nigerian bank to enter the Kenyan market after United Bank of Africa (UBA), Guaranty Trust Bank and Access Bank.
UBA entered the Kenyan market in 2009 through greenfield operations while Guaranty Trust Bank joined in 2013 through acquisition of Fina Bank Group.
Access Bank entered the market in 2020 following its acquisition of Transnational Bank.
Access Bank has since consolidated its position in the Kenyan market further following the acquisition of National Bank of Kenya from KCB Group, a deal that was completed on April 14, 2025 after a prolonged wait.
The move by Zenith targeting an acquisition in the Kenyan market comes at a time when the bank has just recently concluded its latest cash call through a combination of a rights issue and a public offer.
Through disclosures made on January 26, 2025, Zenith announced that it has raised Sh29.49 billion through a rights issue that saw it float an additional 5.23 billion ordinary shares to existing shareholders and a public offer which saw it float 2.77 billion shares targeting new shareholders.
“The public offer was 160.47percent oversubscribed with a total of 4,440,587,250 ordinary shares allotted based on the terms of the offer and the Central Bank of Nigeria’s Capital Verification Exercise. The rights issue was also 100.18 percent subscribed with a total of 5,232,748,964 ordinary shares allotted,” Zenith said in a statement.
“This landmark transaction underscored our commitment to strengthening our capital base, enhancing our competitive edge, and positioning ourselves for sustainable growth and profitability.”
A rights issue is where an entity invites its existing shareholders to purchase additional shares in the company. Companies generally issue a rights offering to raise additional capital.
A public offering on the other hand is the sale of equity shares or other financial instruments such as bonds to the public to raise capital. The capital raised in a public offering may be intended to cover operational shortfalls, fund business expansion, or make strategic investments.
Access Bank equally undertook a rights issue in the Nigerian market recently ahead of closing its deal with KCB Group on the acquisition of National Bank where it raised Sh29.57 billion.
