KCB Group, Kenya’s largest commercial bank by assets, has officially confirmed that it has shortlisted a local domestic bank for potential acquisition, marking a significant step forward in its efforts to enter the Ethiopian market.
This move, which is expected to be completed before the end of 2026, positions the Nairobi-based lender to become one of the first foreign banks to establish a presence in one of Africa’s most sought-after banking frontiers.
The announcement follows a highly profitable financial year for the group, providing it with the substantial capital strength required to join Ethiopia’s newly liberalized yet strictly regulated financial sector.
For the full 2025 fiscal year, KCB Group reported a record profit after tax of 68.4 billion Kenyan shillings ($544 million), representing an impressive 11% growth compared to the previous year.
Following months of market assessment and feasibility studies, KCB Group has moved from expressing interest to taking concrete action. Finance Director Lawrence Kimathi stated that the bank has concluded its shortlisting process and selected an institution it believes aligns with its strategy and corporate culture.
In a recent interview, Kimathi said, “Last year, we indicated that there were a number of banks we were looking at for shortlisting. We have now narrowed it down to the one we believe we can move forward with. We are looking to make an official announcement at least sometime within this year.”
While the name of the target bank has not yet been disclosed, KCB’s move signals a strategic shift: the bank has opted to buy into an existing institution rather than starting a new bank from scratch (greenfield investment).
This approach allows for rapid market entry and enables the group to leverage an already established local customer base and branch network.
According to the Banking Business Proclamation No. 1360/2025, foreign ownership in Ethiopian banks is capped at 49%, and a single strategic investor’s ownership cannot exceed 40%.
However, Kimathi emphasized that “securing control” of the entity is paramount for the group. “Getting control as one enters Ethiopia will be critical,” he stated.
KCB is pinning its hopes on a specific clause within the proclamation that grants the National Bank of Ethiopia (NBE) the authority to issue special permits. This clause stipulates that in exceptional circumstances, the central bank may allow “reputable and sound foreign banks to partially or fully acquire domestic banks” if it provides significant benefit to the national economy or helps rescue a distressed local institution.
While KCB has not yet begun formal negotiations with the National Bank regarding a majority stake, the group’s strong financial standing and regional influence make it a primary candidate for such a special dispensation.
The bank’s total assets have grown to $17.1 billion, and customer loans increased by 15% to reach $12.6 billion. Most importantly, its regional expansion strategy is bearing fruit: subsidiaries outside of Kenya—in markets like Rwanda, Tanzania, and the Democratic Republic of Congo—now contribute one-third (31%) of the group’s profit.
KCB plans to use a portion of the proceeds from its recent sale of the National Bank of Kenya to finance the Ethiopian acquisition.
To avoid the high costs and logistical challenges of building numerous physical branches across the vast Ethiopian landscape, KCB is learning from the success of another Kenyan entity in Ethiopia—Safaricom Ethiopia. By utilizing digital-led services, KCB aims to reach customers through mobile and digital platforms.
The liberalization of Ethiopia’s banking sector, which was made official in March 2025, is cautious yet transparent. While the National Bank’s framework allows foreign banks to enter through branches or share acquisitions, it maintains strict oversight. All foreign investments must be made in hard currency (USD, Euro, or GBP).
KCB is not the only institution to recognize the potential of Ethiopia’s 120-million-strong market. South Africa’s Standard Bank has already renewed its representative office license in Addis Ababa, while Absa Group has also expressed interest while awaiting further clarification on ownership restrictions.
