Nigeria's second-largest bank by asset base and market capitalisation, Zenith Bank, is seeking to acquire Kenya's Paramount Bank and has sought regulatory approval to proceed with the transaction.
Zenith's plan to enter the East African market through an acquisition in Kenya was reported earlier, but the target bank was not identified.
The Business Daily has now confirmed that Zenith is at an advanced stage of securing the regulators' approval to complete the acquisition of Paramount Bank.
It is keen to conclude the deal in January, should it be approved. The value of the transaction was not disclosed.
Paramount Bank closed 2024 with a net profit of Sh339.9 million, up from Sh294.8 million reported the year before. The bank's total assets stood at Sh15.9 billion while the loan book was at Sh9.4 billion in the review period.
With an asset base of Sh2.68 trillion, Zenith is bigger than Kenya's two largest banks, KCB Group and Equity, whose assets stand at Sh1.96 trillion and Sh1.8 trillion, respectively.
It joins a growing list of Nigerian lenders trying to find new avenues to grow and diversify their regional footprint after slow economic growth at home.
The transaction is the latest in Kenya's banking sector, where a tenfold increase in the minimum core capital requirements for commercial banks to Sh10 billion is expected to trigger deals and tie-ups.
"It's a brownfield market entry; we are trying to acquire a bank," a top official from Zenith, who sought anonymity owing to non-disclosure agreements relating to the transaction, told the Business Daily.
"We are at an advanced stage on the way to regulatory approval because when you are buying a financial institution in any country, both the regulators from the acquirer and the target jurisdictions must approve. If we had our way, we'd be at Kenya's doorstep by January 1, 2026."
Paramount Bank started operations in 1993 as Combined Finance Ltd, which was a non-banking financial institution, before expanding its range of services to become a fully-fledged commercial bank in 1995. In 2000, Combined Finance Ltd merged with Universal Bank Ltd, setting the stage for its transition to Paramount Bank in 2005. Paramount Bank operates eight branches across the country.
As at the close of December 2024, Paramount Bank's core capital stood at Sh2.67 billion, making it one of the banks whose recapitalisation plans the market would be keeping a close eye on, given the progressive upgrade of minimum core capital requirements over the next five years.
The minimum core capital in the banking sector was, through the Business Laws (Amendment) Act 2024, revised upward from Sh1 billion to Sh3 billion by the end of December, Sh5 billion by the close of 2026, Sh6 billion by the end of 2027, Sh8 billion in 2028 and Sh10 billion by the close of 2029.
In its 2024 annual report, Paramount Bank had informed shareholders of its plans to build up core capital in line with the new prudential guidelines prescribed by the Central Bank of Kenya (CBK).
"In line with the Central Bank of Kenya's directive on progressive buildup of minimum core capital to Sh10 billion by December 31st, 2029, Paramount Bank Ltd remains committed to aligning its capital base with the regulatory trajectory. Paramount Bank Ltd is strategically preparing for this transition through prudent earnings retention policies, capital conservation buffers, and measures growth of risk-weighted assets," the bank stated in the annual report.
Zenith's planned acquisition in Kenya comes at a time when the bank has recently concluded its latest cash call through a combination of a rights issue and a public offer.
Through disclosures made on January 26, 2025, Zenith announced that it had raised Sh29.49 billion through a rights issue that saw it float an additional 5.23 billion ordinary shares to existing shareholders and a public offer, which saw it float 2.77 billion shares targeting new shareholders.
"The public offer was 160.47 percent oversubscribed with a total of 4,440,587,250 ordinary shares allotted based on the terms of the offer and the Central Bank of Nigeria's Capital Verification Exercise. The rights issue was also 100.18 percent subscribed with a total of 5,232,748,964 ordinary shares allotted," Zenith said in a statement.
Zenith Bank says its entry into Kenya will aim at serving the entire spectrum of the market.
"Zenith Bank traditionally serves all the segments –corporate, retail and public. We intend to continue to pursue this strategy in the markets we go to," the bank's top official told the Business Daily.
If the acquisition is successful, Zenith will be the fourth Nigerian bank to enter the Kenyan market, joining United Bank of Africa, which entered the market in 2009 through greenfield operations.
Guaranty Trust Bank entered the market in 2013 through the acquisition of Fina Bank Group, while Access Bank bought Transnational Bank in 2020.
Access Bank has since consolidated its position in the Kenyan market even further following the acquisition of National Bank of Kenya from KCB Group in a deal that was concluded on April 14, 2025, after a prolonged wait.
On March 23, 2025, Ecobank became the first lender to disclose capital injection given the enhanced core capital requirements in Kenya, with the Togo-based parent entity, Ecobank Transnational, pumping in $27 million (Sh3.5 billion), shoring up the Kenyan subsidiary's total capital to Sh8.5 billion.
Banks that have indicated they are exploring alternative capital raising plans include Family Bank, which is expected to go public by listing on the Nairobi Securities Exchange in 2026, coming on the back of a rights issue in 2023.
The CBK also lifted the decade-long moratorium on licensing of new banks, effective July 1, 2025, a pointer to the regulator's bid to welcome new entrants into the playing field.
