Nigeria’s second-largest bank by assets, Zenith Bank Plc, is in advanced negotiations to acquire Kenya’s Paramount Bank Ltd.
The proposed deal shows a trend of Nigerian financial institutions expanding their footprint into Kenya, a development significantly accelerated by new regulatory mandates from the Central Bank of Kenya (CBK).
The acquisition, which comes months after Access Bank completed its takeover of the National Bank of Kenya (NBK), is expected to be finalized within months, pending final approvals from the Central Bank of Nigeria (CBN) and the CBK. Executives from Zenith Bank have reportedly already met with Paramount’s shareholders in Nairobi.
Zenith Bank’s timely move is directly linked to the sweeping regulatory changes being implemented by the Central Bank of Kenya, which are putting pressure on smaller lenders and forcing consolidation.
The CBK has embarked on a multi-phased plan to dramatically increase the minimum core capital requirement for commercial banks:
- The requirement is set to rise from the current Ksh. 1 billion to Ksh. 3 billion by December 2025.
- This threshold will increase further to Ksh. 10 billion by 2029.
These steep increases are compelling mid-tier and small banks, like the eight-branch Paramount Bank, to seek mergers, acquisitions, or recapitalisation to remain compliant. For well-capitalised Nigerian lenders like Zenith, which recently concluded a successful Ksh. 34.2 billion rights issue, this environment presents a prime opportunity to acquire existing operations and gain immediate market access.
Paramount Bank Ltd, which began as a non-bank financial institution in 1993, is classified as a “small” commercial bank by the CBK. Its acquisition by Zenith Bank, an international player with subsidiaries across West Africa and a presence in France and the UAE, will inject significant capital and competition into the Kenyan market.
Upon approval, Zenith Bank will become the fourth Nigerian lender to operate in Kenya, joining Access Bank, Guaranty Trust Bank (GTBank), and United Bank for Africa (UBA).