Kenya’s competition regulator has approved Zenith Bank Plc’s acquisition of Paramount Bank Limited, concluding that the deal is unlikely to harm competition in the country’s banking sector while safeguarding public interest concerns, particularly employment.
In a decision released on 22 January 2026, the Competition Authority of Kenya (CAK) cleared Zenith’s purchase of 100% shareholding in Paramount Bank, subject to conditions requiring the retention of all Paramount Bank employees for at least one year following completion of the transaction.
The regulator said its assessment found no evidence that the acquisition would substantially lessen competition in Kenya’s banking market, which it described as unconcentrated and highly competitive.
Zenith Bank Plc, the acquiring firm, is incorporated in Kenya but operates primarily through its parent company, which is listed on the Nigerian and London stock exchanges. According to CAK, Zenith currently has no commercial banking operations in Kenya, limiting any overlap with Paramount Bank’s activities.
Paramount Bank, the target institution, is a locally incorporated commercial bank that also controls Paramount Bancassurance Intermediary Limited and PB Capital Limited, its investment banking subsidiary.
As of December 2024, Paramount Bank was classified as a Tier III bank, ranking 33rd out of 39 licensed banks in Kenya.
“The target’s market share will not change post-merger since Zenith does not have similar commercial activities in Kenya,” CAK noted, adding that the transaction is therefore unlikely to raise competition concerns.
CAK’s decision places the transaction within the broader context of Kenya’s banking sector, which is regulated by the Central Bank of Kenya (CBK) and structured into three peer groups: Tier I, Tier II, and Tier III, based on a weighted index of assets, deposits, capital, and customer accounts.
Data from CBK show that Tier I banks control 75.6% of the market, led by KCB Bank Kenya (16.6%), Equity Bank Kenya (12.8%), and Co-operative Bank of Kenya (9.6%). Paramount Bank holds just 0.2% of total market share, placing it firmly among smaller lenders.
The regulator also assessed concentration using the Herfindahl-Hirschman Index (HHI), a standard global measure of market competitiveness. Kenya’s banking sector recorded an HHI score of 801.05, both before and after the proposed acquisition.
An HHI below 1,000 is considered unconcentrated, indicating a market where no single firm or group of firms exercises dominant control. CAK said a merger in such a market is unlikely to distort competition.
CAK further examined the concentration ratio of the top four banks (CR4), which stood at 47.3%. This places Kenya’s banking sector in the moderately concentrated category, according to international benchmarks.
While high concentration can pose risks to consumer welfare and innovation, CAK concluded that the presence of 39 licensed banks, combined with growing digital channels such as mobile and internet banking, continues to exert competitive pressure across the sector.
The authority also cited declining reliance on physical branch networks and automated teller machines (ATMs), as digital adoption reshapes how customers access banking services.
Beyond competition, Kenyan law requires the regulator to assess whether mergers negatively affect the public interest.
Under the Competition Act, these considerations include employment, the competitiveness of small and medium-sized enterprises (SMEs), and the ability of domestic industries to compete internationally.
CAK said the parties had demonstrated that the transaction would not result in adverse public interest outcomes. In particular, Zenith committed to retaining all 78 Paramount Bank employees under their existing terms.
This commitment was formalized as a binding condition of approval, requiring Zenith to maintain the workforce for at least 12 months after the transaction’s completion.
“The negative public interest concern regarding employment can be addressed through mitigating remedies,” the authority stated.
According to submissions reviewed by CAK, the rationale behind the acquisition is to strengthen Paramount Bank’s financial position, enhance compliance with capital requirements, and reduce reliance on ad-hoc shareholder support.
The deal also reflects broader consolidation trends within Africa’s banking industry, where cross-border groups seek footholds in new markets through acquisitions of smaller lenders.
However, CAK stressed that its approval was based solely on competition and public interest considerations within Kenya and did not assess broader strategic ambitions.
The transaction met Kenya’s threshold for mandatory notification and full merger analysis, as stipulated under the Competition (General) Rules, 2019. Mergers involving combined assets or turnover exceeding KES 1 billion require prior approval before implementation.
With clearance now granted, Zenith Bank can proceed with the acquisition, subject to compliance with employment conditions and any additional approvals required from sector regulators.
CAK concluded that the deal would not lead to a substantial lessening or prevention of competition in Kenya’s banking sector, noting that more than 99.8% of the market remains controlled by other banks.
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