Smaller Banks Race to Meet Tougher Capital Rules as Regulatory Pressure Mounts

Four banks reportedly remain below the minimum capital requirement set by regulators. With higher thresholds taking effect over the next few years, the affected lenders are now pursuing fresh funding, government support and mergers to bridge the gap.

Quarterly disclosures for the period ended March 31, 2026, show that Credit Bank, Consolidated Bank of Kenya, Development Bank of Kenya and Access Bank Kenya had not yet met the Sh3 billion minimum core capital requirement introduced under the Business Laws (Amendment) Act, 2024.

The legislation raised the minimum capital threshold from Sh1 billion and will progressively increase it further to Sh5 billion by the end of 2026, Sh6 billion in 2027, Sh8 billion in 2028 and Sh10 billion by the end of 2029.

Despite the non-compliance by four lenders, the number of banks below the Sh3 billion threshold has reduced significantly from 10 recorded at the end of September last year. Several institutions, including M-Oriental Bank, ABC Bank, Middle East Bank Kenya, CIB Kenya, Premier Bank and UBA Kenya, have since strengthened their capital positions through fresh capital injections.

Credit Bank recorded the largest shortfall of Sh1.63 billion as of March and is pursuing a Sh4.5 billion private placement approved by shareholders in December. ShoreCap III LP and Sansora Group of Companies have each committed Sh1 billion, while another investor is reportedly undergoing vetting by the Central Bank of Kenya for a potential $100 million investment that could push the lender’s core capital above Sh5 billion by year-end.

Consolidated Bank is seeking Sh1.125 billion from the National Treasury after reporting negative core capital of Sh541.14 million. Development Bank of Kenya, which reported core capital of Sh2.17 billion at the end of March, has yet to publicly outline a capital-raising strategy.

Meanwhile, Access Bank Kenya plans to address its capital deficit through a proposed merger with National Bank of Kenya. Access Bank reported Sh1.1 billion in core capital, while National Bank already exceeds the regulatory requirement with Sh12.4 billion.

The Treasury maintains that the stricter capital requirements are intended to strengthen the banking sector, which holds more than Sh6.393 trillion in customer deposits. Total banking sector assets have also expanded significantly, rising to more than Sh8.624 trillion as of February, compared to Sh2.3 trillion in 2012.