Number of Banks Staring at Closure Drops to 12 After Changes to Minimum Deposits Law

Tuesday, December 10, 𝟐𝟎𝟐𝟒

In today’s money news, Business Daily reports that twelve Kenyan banks must raise a combined Ksh11.85 billion by December 2025 to meet the new minimum core capital requirement of Ksh3 billion, following a recently passed law. The largest shortfalls include Consolidated Bank (Ksh3.7 billion), Access Bank (Ksh1.7 billion), and HFC (Ksh1.3 billion), with smaller gaps at institutions like Habib Bank AG Zurich (Ksh84.8 million). The law, aimed at boosting financial sector resilience, will gradually increase the threshold to Ksh10 billion by 2029. As the deadline looms, the sector may witness mergers, acquisitions, or strategic buyouts to meet regulatory demands, reshaping Kenya’s banking landscape.

The standard reports that banks in Kenya have committed to gradually lowering lending rates following the Central Bank of Kenya’s (CBK) recent rate cuts, but they caution that reductions will depend on economic conditions and existing deposit costs. The Kenya Bankers Association (KBA) noted that while some rate reductions will begin in December, full adjustments will be progressive due to deposits locked at higher rates. Rising living costs, delayed government payments, and elevated borrower risk are complicating immediate relief. President William Ruto and the CBK, have urged banks to expedite rate cuts to stimulate credit and counter the credit crunch impacting low-income consumers and businesses.

Nigerian oil firm Asharami Synergy is in talks with the Kenya Pipeline Company (KPC) to fund a Sh17.7 billion cooking gas facility in Mombasa. The 30,000-tonne LPG plant, expected to be completed through a public-private partnership, aims to bring gas importation under Kenya's open tender system, reducing prices by up to 30% as reported by Business Daily. This aligns with government efforts to make cooking gas more affordable under the Bottom-Up Economic Transformation Agenda. LPG consumption rose by 16.5% this year, highlighting growing demand amidst ongoing price challenges.

The Capital Business reports that bitcoin, the world’s leading cryptocurrency, has hit the historic milestone of $100,000 for the first time. The surge comes on the heels of U.S. President-elect Donald Trump's crypto-friendly rhetoric and plans to appoint Paul Atkins, a pro-cryptocurrency former SEC commissioner, as head of the Wall Street regulator. This landmark represents a 40% increase since election day and more than double Bitcoin’s value at the start of 2024. The crypto market, now valued at $3.3 trillion, celebrated the event with watch parties and social media buzz. Trump's shift from calling Bitcoin a "scam" in 2021 to vowing to make the U.S. "the crypto capital of the planet" has reignited optimism, driving institutional interest. Financial giants like BlackRock and Fidelity have recently introduced Spot Bitcoin ETFs, further legitimizing the asset class.

The Hustler Fund is set to undergo significant updates, including tripling loan limits, extending repayment periods from 14 to 30 days, and adjusting interest rates to between 8% and 9.5% annually. Since its launch, the fund has disbursed over Ksh60.5 billion, although defaults have reached Ksh12.4 billion. These changes are aimed at improving accessibility and repayment terms for beneficiaries.

The Affordable Housing Board is recruiting estate agents to accelerate the sale and mortgage uptake of its housing projects, targeting 200,000 units annually. Agents will earn commissions for selling homes, assisting buyers with mortgages, and managing properties, with potential earnings of up to Ksh94,088 for selling a Ksh2 million house as reported by Business Daily. They will also oversee marketing campaigns, handle buyer agreements, and collaborate with banks to secure financing. With 746,795 housing units proposed as of August 2023, the initiative aims to address Kenya's housing deficit by streamlining buyer access and promoting uptake through strategic partnerships.

In a report by CapitalBusiness, the Kenya Revenue Authority (KRA) recorded a 4.3% growth in revenue collection, amassing Ksh963.75 billion between July and November 2023. Despite economic challenges, customs taxes rose by 5.9% to Ksh359.57 billion, while domestic tax collections grew by 3.5% to Ksh643.79 billion during the period. However, factors like reduced domestic demand, evidenced by a Purchasing Managers Index (PMI) average of 48.94 (indicating economic contraction), and government austerity measures affected revenue performance. KRA aims to collect Ksh2.704 trillion by the end of FY 2024/2025, signaling efforts to overcome economic headwinds.