Equity Group has sought exemption from a rule in the Democratic Republic of Congo (DRC) that demands the lender sells a 30 percent stake in the subsidiary to nationals of the central African nation.
The lender sent a memo to the DRC government on May 27 through the bankers’ lobby, the Association Congolaise des Banques (ACB), requesting an exemption to the rule that looks set to slow down Equity’s ambition to reduce reliance on the Kenya operations.
The DRC’s central bank—Banque Centrale du Congo (BCC)—requires banks operating in the country to have at least four unrelated shareholders, including current owners, to hold a minimum stake of 15 percent each by the end of 2026 to spread risks.
Local shareholders must also own the banks at least 45 percent, prompting one of the largest deal-making in the region.
The directive known as Instruction 18 means Kenya’s two biggest lenders, Equity Group Holdings and KCB Group, must sell significant stakes within the next 19 months to comply.
Equity Group Chief Executive James Mwangi said complying with the directive would be impractical, especially for listed firms like itself and KCB Group that have subsidiaries in the DRC.
“We have put our memorandum to the government [of DRC] and told them that it is a very noble process, but like in any other country in the world, the rule should exempt listed companies,” Mr Mwangi told the Business Daily.
“We presented our memorandum under the DRC banking association last Tuesday (May 27, 2025). So, it is before Parliament. I believe and trust that it is not going to be an issue and it was just an omission by not exempting listed companies.”
Both lenders own 85 percent stakes in their DRC subsidiaries and must, therefore, cede at least a 30 percent stake to meet the BCC’s demands.
Other listed banks operating in the DRC are Standard Bank, Citi Group, Access Bank, Ecobank, Bank of Africa and United Bank for Africa.
Mr Mwangi says almost similar shareholding laws exist in several countries around the world, including Kenya, adding that exemptions have been granted to publicly listed companies.
He cited the Central Bank of Kenya (CBK) prudential guidelines barring non-operating holding companies from acquiring more than 25 percent of a bank’s paid-up share capital without the regulator’s exemptions.
“We have no problem with locals owning more stake. The [DRC] government came from a position that most banks in DRC are owned by individuals. We [Equity] are already diversified. We have no risk of concentration...I don’t think there is anywhere in the world where such an exemption [to listed firms] has been left out,” he said.
If the application does not go through, Equity Group Holdings and KCB Group will be compelled to sell significant stakes within the next 18 months to comply with the DRC’s regulations.
They will, therefore, be required to cede at least 30 percent to meet the BCC’s demands.
Based on previous deals, Equity’s 30 percent stake is valued at a minimum of Sh42 billion, while KCB’s would go at least Sh8.86 billion.
DR Congo is one of the largest countries in Africa by land mass and has more than 80 million people, making it appealing to ambitious lenders in regional states looking for growth on the continent.
It has emerged as the most profitable foreign market for Kenyan banks, posting higher profits compared to Uganda, South Sudan, Tanzania and Rwanda.
Equity BCDC posted a 29 percent rise in net profit last year to Sh15.6 billion while its asset base stood at Sh656.5 billion.
KCB’s TMB posted a Sh10.4 billion net profit in 2024 from Sh8.1 billion a year earlier. Equity and KCB posted Sh0.6 billion and Sh1.1 billion profits in Uganda, respectively.
In the first quarter ended March 2024, Equity BCDC’s net profit receded by 13 percent to Sh3.8 billion but remained the most profitable subsidiary outside Kenya, followed by Equity Bank Rwanda (Sh1.1 billion).
The two Kenyan lenders view DRC subsidiaries as foreign units that would diversify their profits and cut reliance on Kenya.
The DRC has become a lucrative landing spot for African-based lenders looking for growth in the region and a foothold in the vast mineral-endowed central African country.
Equity was the first Kenyan lender to enter the DRC when it acquired an 86.6 percent stake in German Bank ProCredit between 2015 and 2017 before raising it further to 94.3 percent.
In 2020, Equity acquired a 66.53 percent shareholding in Banque Commerciale du Congo from the family of businessman George Arthur Forrest and merged it with the continuing Equity Bank Congo (EBC) to form a new bank, Equity BCDC.
The wealthy Forrest family is known for the Groupe Forrest International, a company founded in 1922 with interests in construction, electricity, industry, mining services, agribusiness, health and welfare.
Equity raised its stake in the new outfit in 2023 to 85.4 percent, with the purchase of an extra 6.6 percent stake for Sh9.24 billion.
The deal valued the lender at Sh140 billion, signalling that the 30 percent stake that the bank must cede could be worth Sh42 billion.
The DRC subsidiary had a carrying value of Sh27.3 billion. But market value can be higher or lower than the carrying value at any time.
BCDC was majority-owned by the Forrest family at 66.53 percent, the government of DR Congo at 25.53 percent and minority shareholders at 7.94 percent. Rival KCB Group marked its entrance into the DRC in December 2022 when it completed the acquisition of an 85 percent stake in Trust Merchant Bank SA.
KCB valued its shareholding in the bank, whose brand was retained as TMB, at Sh25.1 billion at the end of 2023.
KCB had previously indicated plans to acquire the remaining 15 percent stake in TMB by fully exiting founding shareholders, Robert Levy, who holds a 13 percent stake, Oliver Meisenberg (one percent) and the estate of Augustin Kabila Kisole (one percent).
The lender, at the time of acquisition, said it saw significant business opportunities from the purchase.
The triple acquisitions by Equity (Pro-Credit/BCDC) and KCB (TMB) in the DRC have helped the two top Kenyan lenders to an asset base of more than Sh1 trillion each, giving the banks the scale to become Pan-African lenders.
