The Central Bank of Kenya (CBK) has announced that it will lift the 10-year ban on licensing new commercial banks.
In a statement on Wednesday, April 16, the CBK said the lifting of the 10-year ban on licensing new banks will be effective from July 1, 2025.
“The Central Bank of Kenya announces that with effect from July 1, 2025, it will lift the moratorium on licensing of new commercial banks,” read the statement in part.
Following the lifting of the moratorium, the CBK announced that new entrants to the Kenyan banking sector will be required to meet the enhanced minimum capital requirements of Ksh 10 billion.
CBK Lifts Ban on Licensing New Banks, Sets Capital Bar at Ksh 10B
The moratorium, which was introduced in November 2015, was initially imposed to address governance, risk management, and operational challenges within the banking sector.
It was intended to provide space for the strengthening of the Kenyan banking sector.
This moratorium, however, did not apply to cases relating to resolution, amalgamation and acquisition of banks.
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According to CBK, since then, significant strides have been made in strengthening the legal and regulatory framework for Kenya’s banking sector.
“Notably, there have been a number of mergers and acquisitions by existing players and entry of new domestic and foreign strategic investors into the sector,” CBK said.
CBK further highlighted that the recent increase in the minimum core capital requirements for commercial banks, as outlined in the Business Laws (Amendment) Act of 2024, will play a crucial role in reinforcing the strength of the banking sector.
The apex bank emphasized that this move is aimed at ensuring that banks are stronger and more resilient, enabling them to effectively navigate growing risks in the global, regional, and domestic markets.
Additionally, CBK stated that these stronger banks will be better positioned to support large-scale financing needs, helping to drive Kenya’s development aspirations forward.
Licensing Ban Spurs Acquisitions of Banks
The banking sector regulator put a moratorium on licensing of new commercial banks in November 2015 following the collapse of Dubai Bank and Imperial Bank.
This left foreign banks with acquisitions as the only way into the Kenyan market, placing a premium on licences held by players.
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Dubai Islamic Bank and Mayfair Bank were the last institutions to be granted new licenses in 2017, having submitted their applications before the ban.
Mauritius’ SBM Bank also used the acquisition route to enter the Kenyan market in 2016 when it bought Fidelity Bank. It then followed up with the 2018 acquisition of certain assets and liabilities of Chase Bank, which had gone into receivership.
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