The Central Bank of Kenya (CBK) has released a draft set of Prudential and Risk Management Guidelines that would introduce a Domestic Systemically Important Banks (D‑SIB) framework, targeting banks whose failure could disrupt Kenya’s financial system and economy.

Designated D‑SIBs would be required to hold higher Common Equity Tier 1 capital buffers, undergo more frequent examinations, conduct quarterly stress tests and maintain recovery and resolution plans.

CBK will use an indicator‑based approach that scores banks on size, interconnectedness, substitutability, complexity and importance to the domestic economy, designating a bank as D‑SIB if its total score exceeds 0.25 or any single category exceeds 0.05.

Assessments will be carried out annually using data as of 31 December, with banks notified by the end of March and a public list expected by June each year.

Banks newly classified as D‑SIBs or moved into higher capital tiers will have up to 12 months to meet the additional requirements.

Why the new framework is being introduced

CBK says the measures aim to strengthen sector resilience, align Kenya’s supervisory regime with post‑2007‑2009 global reforms, and reduce the risk of costly public‑sector bail‑outs from the failure of large, interconnected banks.

The draft also notes that tighter oversight should level the playing field by curbing the Too‑Big‑To‑Fail advantage enjoyed by systemically important institutions.

Public consultation timeline

CBK has opened the draft for public participation and will accept comments until 7 November 2026.