The Central Bank of Kenya (CBK) has ended a decade-long moratorium on the licensing of new commercial banks in the country, citing an improved legal and regulatory environment.
The regulator said that the moratorium, which started on November 17, 2015, following the collapse of two banks in quick succession, will be lifted with effect from July 1, 2025.
Dubai Bank Kenya Limited and Imperial Bank Limited collapsed in August and October 2015, respectively, followed by Chase Bank Kenya in April 2016, hurting customer confidence in the sector.
“Significant strides have been made in strengthening the legal and regulatory framework for Kenya’s banking sector,” said CBK in a statement on Wednesday.
“Following the lifting of the moratorium, new entrants to the Kenyan banking sector will be required to demonstrate that they can meet the enhanced minimum capital requirements of Sh10 billion,” it added.
The Sh10 billion requirement was introduced in the Business Laws (Amendment) Act, of 2024, which revised the minimum core capital from Sh1 billion. Lenders below this threshold were directed to incrementally grow the figure over a five-year period.
Banks are required to close this year with a minimum core capital of Sh3 billion, rising to Sh5 billion by the end of 2026 and Sh7 billion by the close of 2027.
The lenders will then be required to boost the figure further to Sh8 billion by the end of 2028 and take it to Sh10 billion by December 2029.
The lifting of the moratorium will allow investors to obtain greenfield banking licences, as opposed to the current situation where those wishing to enter Kenya’s banking sector have had to rely on mergers and acquisitions.
CBK’s moratorium and push for stronger banks triggered mergers and acquisitions by existing players and the entry of new local and foreign strategic investors into the sector.
Dubai Islamic Bank and Mayfair Bank (now Commercial International Bank Kenya) were the last banks to receive new licences in 2017, with the lenders having made their applications before the moratorium.
The decade-long moratorium has seen the number of banks in the country reduce from 44 to 38.
Some of the banks that have been acquired or ceded stakes during this period include Giro Commercial Bank, Fidelity Commercial Bank, Chase Bank, National Bank of Kenya (NBK), Jamii Bora Bank, Prime Bank, Credit Bank, Transnational Bank, Mayfair Bank, First Community Bank, Sidian Bank and Spire Bank.
“Stronger and more resilient banks will be able to navigate the growing risks in the global, regional, and domestic arenas. Additionally, they will be able to support large-scale financing needs to meet Kenya’s development aspirations,” said CBK.
I&M Holdings acquired Giro Commercial Bank in mid-2016 as Tanzania’s M Bank acquired Oriental Commercial Bank. This was followed by SBM Holdings acquiring Fidelity Commercial Bank in November 2016.
Diamond Trust Bank snapped Habib Bank in March 2017 before SBM was back in 2018 with the acquisition of certain assets and liabilities of Chase Bank.
The same 2018 saw KCB Group acquire certain assets and liabilities of Imperial Bank, while AfricInvest Azure bought a stake in Prime Bank, followed by Oiko Credit buying a stake in Credit Bank the following year.
Other deals include the merger of CBA Group and NIC Group to form NCBA Group in 2019, and the acquisition of NBK by KCB Group in the same year.
Access Bank of Nigeria acquired Transnational Bank in 2020, while Egypt’s Commercial International Bank bought an additional stake in Mayfair Bank to take full ownership. Co-operative Bank of Kenya acquired Jamii Bora Bank in the same year.
Equity Group acquired Spire Bank in 2022, while Somalia’s Premier Bank Limited bought First Community Bank in 2023.
Private investors, including insurance firms, acquired stakes in Sidian Bank, while KCB is on the verge of selling NBK to Access Bank.
