In Kenya, banking sector oversight falls under the purview of the Central Bank of Kenya (CBK), which serves as the primary regulatory authority. The CBK relies on capitalisation requirements outlined in the Banking Act (2015) and the Prudential Guidelines (2013) to ensure Kenyan banks maintain sufficient capacity to absorb losses relative to their risk exposures. Kenya’s regulations have remained unchanged for almost three decades, with the current minimum capital requirement enacted in 1994.
The CBK governor recently announced the apex bank’s intention to increase the capital requirements for Kenyan banks. The objective is to ensure Kenyan banks are robust enough to operate internationally. This move will spur bank consolidations and share offers in the Kenya banking sector, providing investment opportunities.
This report provides detailed information on the three specific capital requirements stipulated by the CBK: the minimum absolute core capital requirement, the minimum ratios, and the capital conservation buffer. It
