African banking giants set sights on Kenya in East Africa expansion push
The rush is being driven by new minimum capital requirements in Kenya, which are pushing smaller lenders to seek partners and creating a rare opening for takeovers
NAIROBI, March 20, 2026 — Kenya is emerging as the new battleground for Africa’s biggest banks, with major lenders racing to secure a foothold in what is increasingly seen as the gateway to East Africa’s fast-growing economies.
The rush is being driven by new minimum capital requirements in Kenya, which are pushing smaller lenders to seek partners and creating a rare opening for takeovers.
That has drawn interest from across the continent, particularly from South Africa’s largest banks, which are searching for growth beyond their weak home market.
As international lenders such as Standard Chartered, BNP Paribas and Société Générale trim back their African operations, regional banks are stepping in to fill the space.
Nedbank jolted investors in January with plans to buy Kenyan lender NCBA Group. Standard Bank, FirstRand and Absa are also exploring acquisitions, according to people familiar with the matter.
The prize is significant: East Africa is home to nearly 500 million people and a US$ 580 billion economy growing at one of the fastest rates in the world.
From the Democratic Republic of Congo’s mineral wealth to Tanzania’s vast gas reserves, banks see the region as a major frontier for growth.
“The region plays an important role in the relationships between the continent and other parts of the world, and we want to facilitate that activity,” Standard Bank chief executive Sim Tshabalala said in an interview.
“A bank grows on the basis of growth in gross domestic product [GDP], and financial deepening is increasing in Kenya, and we want to be part of that,” he said.
East African economies are forecast to expand by an average of 6.1 per cent this year, well above the global average of 3.2 per cent, according to the International Monetary Fund.
Yet banking penetration remains low. Fewer than 40 per cent of people in the region have access to formal banking services, according to the World Bank’s Global Findex Database 2025.
Analysts say that combination of rapid growth, low credit penetration and strong margins makes Kenya and the wider region especially attractive.
“When you put growth, credit under-penetration and profitability together, it starts to make sense why African banks — and in particular, big South African banks — are keen on the market,” said Maureen Kirigua, an analyst at NCBA.
For South African lenders, the attraction is clear. With domestic growth remaining sluggish, East Africa offers a chance to diversify into a more dynamic market.
Data from Kenya’s central bank show the sector’s average return on equity stood at 23 per cent by June, almost double the roughly 12 per cent posted by global lenders last year, according to Ernst & Young.
West Africa, by contrast, looks less appealing. Many lenders already have operations there, while others have been rattled by Ghana’s debt default, Nigeria’s currency devaluation and political instability across the Sahel.
Nedbank’s experience underlines that shift. The bank sold its minority stake in Ecobank Transnational last year for US$ 100 million, far below the US$ 500 million it paid less than 20 years earlier, citing worsening Nigerian economic conditions and the exit of South African clients from the region.
Even Nigeria’s biggest banks, including Access Bank and Zenith Bank, have turned to Kenya for expansion.
“East Africa has proven to be more stable — politically and economically — than West Africa, where banks have previously looked for growth,” said Adrienne Damant, an analyst at Avior Capital Markets.
That optimism persists despite unrest in Kenya, where Amnesty International says at least 128 people were killed during protests over the past two years.
Still, investors appear willing to look beyond the turbulence.
“The banks are forgetting the instability and/or looking through it as short-term episodes,” said Ilan Stermer, a research consultant at Anchor Stockbrokers in London.
Kenya’s central bank governor, Kamau Thugge, says lenders are eager to deepen their presence in the country.
“All the banks want to strengthen their presence here,” he said.
NCBA chief executive John Gachora argues that Kenya’s relative stability, skilled workforce and digital advancement make it one of the continent’s most attractive markets.
“It’s got all the ingredients of growth,” he said.
More foreign entrants are expected to come through acquisitions rather than greenfield expansion.
Kenya’s central bank wants lenders to raise minimum capital to at least 10 billion shillings by the end of 2029. About a third of banks were below the threshold set for 2025, leaving them exposed to consolidation.
“Mergers and acquisitions offer low-hanging fruit for market entry in Kenya,” said Churchill Ogutu, an economist at IC Group. “More deals are on the near- to medium-term horizon.”
For Africa’s banking heavyweights, Kenya is no longer just another market. It is fast becoming the launchpad for the next phase of expansion across East Africa.
https://thecooperator.news/kenyas-saccos-eye-fintech-alliances-as-digital-transactions-surge/
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