Stanbic Kenya Sees Ten-Fold Capital Rules Halving the Industry

A Stanbic Holdings Plc bank branch in downtown Nairobi, Kenya, on Saturday, Dec. 5, 2020. Kenya is seeking a loan of as much as $2.3 billion from the International Monetary Fund under the lender’s extended fund facility. Photographer: Fredrik Lerneryd/Bloomberg (Fredrik Lerneryd/Bloomberg)

(Bloomberg) -- Kenya’s plan to increase the minimum core capital for banks ten-fold could half the number of lenders in the East African nation, as some of these businesses merge their operations, according to Stanbic Holdings Plc.

Raising the minimum capital requirement for the country’s banks to 10 billion shillings ($77.5 million) over three years will likely halve the industry, according to Stanbic Bank Kenya Chief Executive Officer Joshua Oigara.

READ: Kenya Banks May Take 5 Years to Meet 10-Fold Capital Hike: SIB

Kenya has 38 commercial banks and the eight publicly traded lenders control 80% of the industry and also held 93.1 billion shillings in total capital by the end of the first quarter, Oigara said Wednesday in a speech in the capital, Nairobi. 

The banking industry’s capital adequacy ratio increased to 18.6% in March, from 18.3% in December, while total assets declined 2.7% to 7.5 billion shillings during the period, according to the Central Bank of Kenya. The lenders’ profit before tax jumped 51% to 73.5 billion shillings.

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