Nigerian lenders are expanding into Kenya as capital rules tighten across Africa. Zenith Bank has received competition approval to buy Paramount Bank.
Kenya’s banking market is drawing fresh interest from Nigerian lenders as tougher capital rules push smaller banks to seek new owners. The latest signal of this shift is Zenith Bank Plc’s plan to fully acquire Nairobi-based Paramount Bank Limited.
The deal shows how surplus funds raised in Lagos are being redirected to secure banking licenses in East Africa’s main financial centre.
On January 22, 2026, the Competition Authority of Kenya approved Zenith’s plan to take over 100 per cent of Paramount Bank. The approval came with conditions linked to staff protection.
With competition concerns addressed, the final step before completion is approval from the Central Bank of Kenya. Zenith currently has no banking operations in Kenya, meaning the takeover creates no overlap in the market.
Paramount is a Tier III lender, ranking 33rd out of 39 commercial banks in Kenya as of December 2024. The bank controls roughly 0.2 per cent of total industry assets.
Despite the acquisition, the structure of Kenya’s banking sector remains largely unchanged. Market concentration indicators still place the industry in the unconcentrated to moderately concentrated range.
Employment safeguards were the only public-interest condition attached to the deal. Zenith must retain at least 78 Paramount employees for a minimum of one year after the transaction is completed.
Any staff exits during that period can only happen through normal turnover or performance-related processes.
The takeover comes as Paramount works to meet Kenya’s rising capital thresholds. By September 2025, the bank had boosted its core capital to Sh3.12 billion, surpassing the Sh3.0 billion minimum set for the end of 2025.
However, the required capital level will continue to rise each year until 2029, increasing the strain on smaller lenders that lack strong shareholders.
For the nine months to September 2025, Paramount posted strong growth in non-interest income, which helped lift overall operating income. At the same time, interest earnings dipped, while costs climbed sharply.
Higher expenses and a surge in loan-loss provisions weighed on results. Profit before tax declined, while profit after tax showed only marginal growth. Non-performing loans also rose significantly during the period.
Zenith enters the deal with a strong balance sheet. In mid-2024, the bank raised fresh capital through a rights issue and public offer, exceeding its target by a wide margin.
The funds were raised to meet Nigeria’s higher capital requirements, but the bank has said the stronger position will also support growth in Africa and other markets.
Zenith’s move follows a clear pattern. Over the years, several Nigerian banks have entered Kenya through new licenses or takeovers. United Bank for Africa set up operations in 2009, while Guaranty Trust Bank and Access Bank entered through acquisitions. Ecobank also runs a Kenyan subsidiary as part of its regional network.
Zenith’s planned purchase of Paramount fits the same approach, using fresh capital to secure a foothold as local rules tighten. Attention now shifts to the Central Bank of Kenya and whether post-acquisition support will keep Paramount ahead of rising regulatory demands.
