2026 is proving to be a year of mergers and acquisitions. After Nedbank’s recent proposal to acquire a majority stake in NCBA, the Competition Authority of Kenya (CAK) has given the greenlight for the acquisition of Paramount Bank Limited by Zenith Bank PLC, granting its approval with a crucial condition aimed at protecting jobs.
Zenith Bank PLC, which is incorporated in Kenya, is a subsidiary of a group listed on the Nigerian and London stock exchanges, with no current operations in the country. Its parent company provides a wide array of financial services across multiple continents.
On the other hand, Paramount Bank Limited is a Kenyan bank that also controls subsidiaries in insurance intermediation and investment banking. The rationale behind the merger is to bolster Paramount Bank’s financial standing, ensure it meets future capital requirements, and reduce its need for sporadic shareholder support.
The Authority examined the relevant market as the nationwide provision of banking services, noting that Paramount operates across Kenya. Regulated by the Central Bank of Kenya, the sector is segmented into tiers based on size and reach, with Paramount classified as a Tier III institution, holding a modest 0.2% market share.
Tier III banks hold a mere market share of 7.7% while Tier I, which includes the likes of KCB and Equity, holds the majority share of 75.6% and Tier II holds 16.7%.
CAK employed the Herfindahl-Hirschman Index (HHI), a comprehensive measure that accounts for all players in the sector to thoroughly assess the market concentration. The analysis found the banking market’s HHI to be 801.05, firmly within the “unconcentrated” classification, a status that remains unchanged by the merger since Zenith holds no existing market share.
The assessment also found that the merger itself raises no competition concerns because Zenith has no existing commercial banking activities in Kenya. Therefore, Paramount’s market position remains unchanged, and the merged entity will continue to face stiff competition from banks controlling the remaining 99.8% of the market.
However, the authority identified a potential public interest concern regarding employment. To address the situation, the parties assured that no job losses would occur.
Therefore, the CAK granted its approval on the explicit condition that Zenith Bank retains all 78 employees of Paramount Bank under their current terms for a minimum of twelve months following the completion of the acquisition. This conditional approval ensures the transaction proceeds while safeguarding the welfare of the bank’s workforce.
