Equity Bank has encountered an unprecedented hurdle in its move to purchase spire bank following the resignation of a board member last week.
Benson Milai resigned from the cash-strapped financial entity over his opposition to the looming acquisition, rendering the board composition inquorate to ratify the final stages of the deal.
His resignation follows that of Wycliffe Osoro, David Wachira and Christine Sabwa earlier, dealing a huge blow to the bank that has been in the final stages of transferring its good books to Equity Bank.
Milai is said to have differing opinions with other board members over the transaction, which also burdens Mwalimu Sacco as it will add over 1.7 billion to cater for.
This move is an additional obstacle since the Banking, Insurance and Finance Union (BIFU) had moved to court to protest the action by Spire Bank. The Legal redress was sought after the lender failed to account for the plight of workers in the Bank, for they were not involved in the sale process.
BIFU argued that there was a collective bargaining agreement between the bank and some of its employees, which the bank failed to explain how they would be handled. However, the bank denied the existence of such an agreement, compelling the workers’ union to seek help from the court.
Monday’s orders by Justice Maurine Onyango gave the green light for the transaction to proceed, with the condition that it involved the workers and followed the due process of the law.
Equity bank and spire bank notified the Central Bank of Kenya (CBK)on Monday that the acquisition was in the process. The CBK expressed optimism that such moves would bring stability to the banking sector but stated that the process was subject to regulatory approvals.
Equity Bank Group Managing Director Dr James Mwangi said Monday that once the acquisition is complete, they hope to inherit a rich customer base with over 1.3 billion in deposits from Spire Bank customers.
“The proposed transaction is likely to result in EBKL acquiring approximately 20,000 deposit customers holding deposits of approximately KES 1,322 million,” said Mwangi.
Mwangi added that the transaction si subject to approvals from bodies such as Sacco Societies Regulatory Authority, Capital Markets Authority and CBK among others.