Kenya Central Bank Governor Prefers ‘Natural’ Bank Consolidation

NAIROBI, Kenya, Capital Markets in Africa: Kenya’s central bank would prefer the country’s lenders to consolidate naturally to build resilience in the industry, Governor Patrick Njoroge said.

Treasury Secretary Henry Rotich this month revived proposals that require lenders to increase their core capital fivefold by 2019, a move that could spur takeovers. The measures, first suggested by Rotich last year, were rejected by lawmakers and labelled by Njoroge in August as “rushed”.

“I am not officially pushing consolidation,” Njoroge said in an interview at a conference in Dar es Salaam, the Tanzanian commercial capital, on Wednesday. “We expect consolidation of our banks and the way we are looking at it is natural consolidation, such that they come out strong and more resilient”

Kenya’s $61-billion economy is over-banked, with 42 lenders serving more than 40 million people, compared with 22 banks in Nigeria, which has a population of 180 million and gross domestic product that is nine times bigger, according to Cytonn Investments Management Limited, a Nairobi-based money manager.

Source: Bloomberg Business News