Industry overview
In major African economies, the banking industry is typically split into tiers based primarily on asset size, regulatory capital, and market influence. Tier 1 banks refer to the largest banks by assets and are distinguished from smaller institutions by these key features:
- Regulatory capital: Tier 1 banks have higher regulatory capital thresholds, typically to facilitate their cross-border operations. They also tend to have stricter liquidity thresholds and greater regulatory oversight in general.
- Systemic importance: They are classified as systemically important financial institutions whose failure could significantly affect the entire financial system.
- Size and scope: Tier 1 banks typically have the largest asset bases, branch networks, and the most comprehensive service offerings.
In East and Southern Africa, the banking industry is highly concentrated. This is evident in the percentage of assets held by the top three banks. In Africa, the average of this metric is 60%, while the figures for East
