Kenya’s competition regulator has approved the acquisition of Paramount Bank Limited by Nigeria’s Zenith Bank Plc, clearing the way for the West African lender to fully take over the small Kenyan bank, subject to conditions aimed at protecting jobs.
In a notice dated Jan. 22, the Competition Authority of Kenya (CAK) said it had authorised Zenith Bank’s proposed purchase of 100 percent of Paramount Bank’s shareholding after concluding that the transaction was unlikely to substantially lessen competition in Kenya’s banking sector.
“The Competition Authority of Kenya has approved the proposed acquisition of 100 percent shareholding of Paramount Bank Limited by Zenith Bank PLC, subject to conditions aimed at safeguarding employment,” CAK said.
The regulator added that any potential adverse impact of the transaction, particularly on employment, could be adequately mitigated through conditions imposed on the deal. It did not disclose specific details of the employment safeguards.
Full competition review
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CAK said the transaction met the threshold for mandatory notification under Kenya’s Competition Act and was therefore subject to a full merger review. The approval follows Zenith Bank’s clarification in November 2025, when it dismissed media reports suggesting that a takeover of Paramount Bank was already under way, stating at the time that the process remained subject to regulatory approvals.
Zenith Bank, one of Nigeria’s largest lenders by assets, has been expanding its footprint across Africa as part of a broader strategy to build a pan-African banking franchise. Paramount Bank, by contrast, is a small Kenyan lender focused mainly on trade finance and corporate banking.
As part of its assessment, CAK said it analysed the structure of Kenya’s banking market, defining both the relevant product market and geographic market in order to determine whether the acquisition would reduce competition.
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The relevant product market was defined as banking services that are reasonably interchangeable or substitutable by consumers based on their characteristics, pricing and intended use, the regulator said.
Fragmented banking sector
Kenya’s banking sector is regulated by the Central Bank of Kenya (CBK) and remains relatively fragmented despite recent consolidation trends. According to CAK, as of December 2024, the country had 39 licensed commercial banks, comprising nine Tier I banks, nine Tier II banks and 21 Tier III banks.
Banks are classified into tiers based on a combination of net assets, customer deposits, capital and reserves, as well as the number of customer accounts. Paramount Bank falls into the Tier III category and ranked 33rd out of 39 banks at the end of 2024, underlining its limited market share.
CAK said its analysis showed that Zenith Bank’s entry through the acquisition of Paramount Bank would not materially alter market concentration or significantly affect competition, given the presence of several large, well-established players.
Major Tier I banks in Kenya include Equity Bank, KCB Group and Cooperative Bank of Kenya, which collectively dominate retail banking through extensive branch networks, digital platforms and agency banking operations.
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Digital shift reshaping competition
The regulator also highlighted structural changes reshaping competition in the banking sector. While physical branch networks remain an indicator of market presence, CAK noted that digital channels such as mobile banking, internet banking and agency banking have increasingly replaced traditional brick-and-mortar operations.
Banking agents, in particular, play a critical role in financial access. CAK data show that more than 90% of approved banking agents are concentrated among a handful of large banks, led by Equity Bank, KCB Bank Kenya and Cooperative Bank.
At the same time, the number of automated teller machines (ATMs) has declined in recent years as customers increasingly rely on mobile money platforms and digital banking services, further lowering barriers to entry for smaller and foreign-owned banks.
Employment conditions
While clearing the transaction on competition grounds, CAK said employment protection was a key consideration in its approval. Kenya’s competition law allows the regulator to impose public interest conditions, including measures to protect jobs, when approving mergers and acquisitions.
The approval marks another step in the gradual consolidation of Kenya’s banking sector, as foreign lenders seek growth opportunities in East Africa’s largest economy. It also strengthens Zenith Bank’s position in the region, adding Kenya to its growing list of African markets.
The transaction remains subject to approvals from other regulators, including the Central Bank of Kenya, before it can be completed.
