For 27 licensed banks, New Year’s Eve will come and go as any other night.
But for about 10 banks, December 31, 2025 marks a crucial day as they are required to finalise capital boosting initiatives where each shall have a core capital of Sh3 billion or risk losing its Central Bank of Kenya (CBK) licence.
As the deadline to raise capital closes in, right issues and capital calls for subsidiaries of foreign-owned banks have dominated the push toward the new funding threshold.
Ten commercial banks were yet to meet the Sh3 billion funding threshold as at the end of September 2025 including the Consolidated Bank of Kenya, Access Bank Kenya Plc, Credit Bank Plc, UBA Kenya Bank and the Development Bank of Kenya (DBK).
Others are the Middle East Bank Kenya (MEB), CIB International Bank, Premier Bank, ABC Bank Kenya and M-Oriental Bank.
In total, the 10 banks required Sh14.4 billion to plug the capital hole at the end of September, but the lenders have been racing to meet the December 31 deadline.
Two of the banks- Consolidated and DBK are State-owned, while four are subsidiaries of international banks in Kenya, including Access Bank, UBA, CIB International, and Premier Bank.
Three of the 10 banks are tipping rights issues to plug the funding gap including Credit Bank which had a capital shortfall of Sh1.77 billion as at the end of September, ABC Kenya Bank which was short of Sh400 million and DBK which with a Sh920 million funding shortfall was the first to indicate a rights issue in March this year.
Under a rights issue, a company asks its existing shareholders to purchase additional shares in the company, often at a discount, increasing the number of outstanding company shares but helping firms raise more funding.
DBK early in the year sought a law firm to guide a rights issue to help comply with higher capital requirements, but the lender is yet to offer an update on how it would plug the Sh920 million shortfall that was required at the end of September.
ABC and Credit Bank are working on their rights issue. ABC in November said it will seek Sh400 million from shareholders via a rights issue.
“Our shareholders recently initiated a cash call to meet CBK’s minimum core capital requirement. This move reflects shareholders’ strong confidence in ABC Bank’s growth strategy and long-term prospects,” said ABC Bank managing director Shamaz Savani.
Credit Bank is eyeing Sh4.5 billion fresh capital through a private placement to meet the Sh3 billion core capital requirement.
The lender called an extraordinary general meeting (EGM) on December 19 where its shareholders approved a proposal to issue up to 45 million ordinary shares to existing and new investors at the price of Sh100 per unit.
Ahead of the EGM, the lender disclosed it had received support from two key shareholders--ShoreCap III LP and Sansora Group of Companies--committed to the CBK that they would sink Sh1 billion each in the bank by the end of December 2025.
The Sh2 billion raised from the two institutional investors will lift Credit Bank’s core capital to at least Sh3.23 billion.
The rights issue will help bring the bank closer to future core capital thresholds set at Sh5 billion at the end of 2026, Sh6 billion at the end of 2027, Sh8 billion in December 2028 and Sh10 billion in December 2029.
Access Bank Kenya, UBA Kenya Bank and Premier Bank are expected to rely on their foreign parent firms for the needed capital injection.
Access Bank Kenya parent-the Lagos headquartered Access Group, which recently acquired the National Bank of Kenya (NBK) is widely expected to infuse new capital in the lender as it seeks to strengthen its Kenyan operations after a pair of acquisitions in the recent past.
UBA Kenya Bank, which is owned by Nigerian UBA Group, has also committed to boosting funding for its subsidiary ahead of the new deadline on capital.
“We are aware of a recapitalisation exercise going on within the Kenya banking industry. UBA Kenya will be fully recapitalised in line with CBK guidelines. Our interest in Kenya however goes beyond that recapitalisation or just a banking licence,” said UBA Group chief executive officer Oliver Alawuba in a September interview.
Premier Bank Kenya- a subsidiary of Somalia’s Premier Bank Limited (PBLS) has not explicitly detailed its recapitalisation plans though it is also widely expected to call on its parent to fund a Sh780 million capital cap.
CIB International Bank, which is owned by CIB Egypt, disclosed receiving Sh1.05 billion ($8.2 million) from its parent in October and expects to close its remaining Sh210 million funding gap at the end of September 2025 through profit retention.
“Our parent injected $8.2 million (Sh1.05 billion) into our books which raises our core capital to Sh2.86 billion, leaving us very close to the Sh3 billion regulatory requirement,” said CIB Kenya chief executive officer Abhinav Nehra.
“We have not doubted support from our parent who remains fully committed to Kenya and hence we are fully geared up to meet the regulatory requirement either by injection of capital whenever it is needed or by ploughing back profits,” he added.
The Consolidated Bank of Kenya and M-Oriental Bank, which had capital shortfalls of Sh3.66 billion and Sh510 million respectively, had not disclosed their new funding plans as of the end of September.
Threat of downgrade
Commercial banks that fail to meet the revised minimum capital thresholds risk being downgraded to microfinance institutions until they mobilise the required funds as per CBK.
The apex bank directed 24 banks in February this year to submit capital raising plans for not just the first year of the core capital revision but until December 2029.
The 24 banks had closed 2024 with core capital levels below Sh10 billion.
“We have written to the banks to tell us what their plan is...not just the first year,” CBK Governor Kamau Thugge said previously.
The Kenya Bankers Association (KBA) indicated that mergers and acquisitions (M&As) were unlikely a solution to meet the first Sh3 billion capital hurdle for banks, indicating it expected all banks to meet the mark comfortably on their own.
M&A action is, however, expected to take centre stage as the capital threshold is raised in subsequent years.
“For this year, we do not expect much movement on mergers and acquisitions because the assurance we have is that banks can individually build up to the Sh3 billion core capital requirement by the end of December,” KBA chief executive officer Raimond Molenje said previously.
“Even if you want to get to the market, there is only a short window left to negotiate. Progressively, as the threshold moves to Sh5 billion next year, we now see M&A activity.”
