Zenith Bank Eyes Kenyan Acquisition Amid Regulatory Shifts

Zenith Bank of Nigeria is in strategic talks to acquire a tier-two lender in the Kenyan market, marking its first entry into East Africa. This move follows other Nigerian banks that have already established a presence in the region. Top executives from Zenith Bank are expected to finalize discussions in Nairobi within the next three months. This initiative comes as Kenya's banking sector undergoes restructuring, with the Central Bank of Kenya (CBK) increasing minimum core capital requirements. The CBK has set new capital requirements, raising the minimum core capital from $7.7 million to $24 million by the end of 2025, with plans to further increase it to $77 million by 2029. This regulatory shift is prompting smaller banks to either raise new funds or consider mergers and acquisitions.

Zenith Bank is leveraging its strong financial performance to secure a foothold in one of Africa’s fastest-growing markets. The bank recently raised around $228 million through a dual rights issue and a public offer, which was oversubscribed by 160%. This fundraising effort boosted its capital base to $402 million, well above the Central Bank of Nigeria’s minimum capital requirement of $327 million, and brought its total assets to $29.6 billion. According to the audited financial results for the 2024 financial year, Zenith Bank recorded a double-digit growth of 86% in gross earnings, increasing from N2.13 trillion in 2023 to N3.97 trillion in 2024. The bank also reported N29 trillion in assets and a market cap of N2.3 trillion at the end of 2024. Zenith Bank’s profit before tax rose by 67%, reaching N1.3 trillion in 2024 from N796 billion in 2023. This growth was driven by a 138% increase in interest income, supported by investments in high-yield government securities and growth in the bank’s loan book.

Zenith Bank’s entry into Kenya follows a trend of other Nigerian banks expanding into the region. Over the past five years, United Bank for Africa (UBA) and Guaranty Trust Bank (GTBank), two other Tier 1 Nigerian lenders, have also entered the Kenyan market. Most recently, Access Bank, Nigeria’s biggest bank, received regulatory approvals from both countries to acquire National Bank of Kenya Limited (NBK) from KCB Group. The Central Bank of Kenya gave its final approval on April 4, 2025, for the transfer of selected NBK assets and liabilities to KCB Bank Kenya Limited under section 9 of the Banking Act. Analysts have predicted more cross-border acquisitions as the combination of deeper pockets and regulatory pressure is accelerating consolidation in Kenya’s banking sector. They explained that foreign lenders, especially from West Africa with fresh capital raised from a public offering, are viewing the recapitalisation deadline as a pivotal entry point.

In the coming days, smaller Kenyan banks will face a significant decision to shore up capital in line with the CBK’s new recapitalisation framework. According to financial data, 27 of Kenya’s 39 licensed banks have met the 2025 requirement. The remaining 12, mainly tier-two and tier-three lenders with limited branch networks, face growing pressure to recapitalise, merge, or sell. This regulatory environment presents a strategic opportunity for Zenith Bank to expand its presence in East Africa, leveraging its strong financial position and investor confidence. The bank’s move into Kenya is part of a broader Pan-African growth strategy, aiming to capitalize on the region’s economic potential and regulatory shifts.