Paramount Bank Hits Sh3bn Capital Target as Compliance Deadline Nears

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Paramount Bank has lifted its core capital to Sh3.118 billion after raising Sh332 million through a rights issue, placing the lender above Kenya’s new December 2025 minimum capital requirement of Sh3 billion.

The increase strengthens Paramount’s balance sheet, boosts lending capacity, and supports ongoing expansion in digital banking, SME financing and trade finance. The achievement also moves the lender ahead of several peers still racing to meet the minimum capital threshold in Kenya.

The recapitalization comes at a time when the country’s phased capital rules continue to reshape the sector. The core capital for banks in Kenya rose from Sh1 billion to Sh3 billion in 2025, and will increase to Sh5 billion in 2026, Sh6 billion in 2027, Sh8 billion in 2028, and Sh10 billion by 2029.

These requirements stem from the Business Laws (Amendment) Act 2024, designed to strengthen the industry after non-performing loans rose to 16.4 percent in 2024. The Act also introduced stronger accountability measures, with penalties of up to Sh20 million for non-compliance.

At mid-2025, Paramount Bank was among 11 lenders below the Sh3 billion mark, facing a gap of about Sh250 million.

Others included Consolidated Bank with Sh701 million in core capital and a Sh3.7 billion shortfall; Access Bank Kenya with a Sh3.4 billion deficit; Credit Bank at Sh1.72 billion short; UBA Kenya with Sh1.49 billion in core capital against a Sh1.51 billion gap and CIB International at Sh1.09 billion short.

Smaller players include M-Oriental, ABC, Premier, Middle East, and Development Bank of Kenya, each with deficits of around Sh930 million.

The Central Bank of Kenya’s September stress tests evaluated each lender’s capital recovery plans, warning that persistent non-compliance could lead to actions such as license withdrawal or temporary conversion to microfinance status.

This regulatory stance has contributed to expectations of continued mergers, rights issues, and balance-sheet adjustments across the sector.

The capital increase also coincides with takeover speculation that emerged in mid-November 2025. Reports suggested that an approval request had been lodged for an acquisition of Paramount Bank by an external party.

The party linked to those reports later issued a clarification denying that any specific transaction was in progress. It confirmed only that it had held exploratory discussions with East African regulators as part of assessing possible entry into regional markets.

If an acquisition were to materialize in the future, it could help Paramount meet the Sh5 billion requirement due in 2026 while supporting product expansion in areas such as mobile wallets and cross-border payment services.

Paramount Bank’s Q3 2025 Pre-tax profit stood at Sh206.1 million, affected by rising non-performing loans, which increased to Sh2.24 billion. Total assets rose to Sh16.49 billion, supported by steady customer deposit growth to Sh12.86 billion.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.