The Central Bank of Kenya (CBK) has mandated that all commercial banks increase their core capital to KSh10 billion by 2029, with an initial target of KSh3 billion by the end of 2025. This directive aims to strengthen the resilience of Kenya’s banking sector and align it with international standards.
As of December 2023, 12 banks have core capital below the KSh3 billion threshold, including:
- Habib Bank AG Zurich – KSh2.9 billion
- Premier Bank Kenya – KSh2.8 billion
- Commercial International Bank – KSh2.7 billion
- M-Oriental Bank – KSh2.6 billion
- Paramount Bank – KSh2.5 billion
- Credit Bank – KSh2.5 billion
- Development Bank of Kenya – KSh2.1 billion
- Middle East Bank Kenya – KSh2 billion
- UBA Kenya Bank – KSh1.7 billion
- HFC Ltd – KSh1.7 billion
- Access Bank Kenya – KSh1.3 billion
- Consolidated Bank of Kenya – negative KSh0.68 billion
These banks are required to submit detailed plans to the CBK outlining how they intend to meet the new capital requirements. Options may include capital injections from shareholders, mergers, or strategic partnerships. The CBK has indicated that consolidation within the banking sector is anticipated, leading to fewer but stronger financial institutions.
The phased approach to increasing capital requirements is designed to provide banks with sufficient time to adjust, thereby ensuring stability within the financial sector. The CBK believes that higher capital bases will enable banks to better manage risks, support larger-scale lending, and enhance their competitiveness both locally and regionally.
Banks that fail to meet the stipulated capital thresholds within the specified timelines may face penalties, including fines or potential downgrading of their banking licenses. The CBK remains committed to working closely with these institutions to facilitate compliance and maintain the overall health of the banking sector.
