The Central Bank of Kenya (CBK) has announced that it has lifted a ten-year freeze on licensing of new banks. The CBK announced that the moratorium that started on November 17, 2015 shall officially end on July 1, 2025.
“The moratorium was imposed against a backdrop of governance, risk management, and operational challenges in the banking sector. It was intended to provide space for the strengthening of the Kenyan banking sector. Since then, significant strides have been made in strengthening the legal and regulatory framework for Kenya’s banking sector,” the CBK said in a statement.
The moratorium had been placed following the collapse of two banks, Dubai Bank Kenya Limited which collapsed in August 2015 and the Imperial Bank Limited which collapsed in October 2015. A few months after the moratorium, in April 2016, Chase Bank Kenya went under.
During the ten-year moratorium, the number of banks in the country reduced from 44 to 38 as banks acquired or ceded stakes. Among the these banks were Spire Bank, Sidian Bank, National Bank of Kenya, Giro Commercial Bank, Habib Bank, Fidelity Commercial Bank, Transnational Bank, First Community Bank, Credit Bank, Mayfair Bank, Jamii Bora Bank and Chase Bank.
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“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,” the CBK stated.
“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.”
The minimum capital requirement of Sh10 billion is contained in the Business Laws (Amendment) Act of 2024. Previously, the minimum threshold was Sh1 billion. Banks that have not yet achieved the Sh10 billion have been given a window to increase their core capital base over a five year period.
In the current financial year, banks in the country are required to close with a minimum core capital of Sh3 billion, which will increase to Sh5 billion as at December 2026, and Sh7 billion as at December 2027. The CBK has also proposed that banks that will be unable to meet these requirements will be given merger opportunities.
