Spire Bank, owned by Mwalimu Sacco, is deep into trouble and could collapse at any time, a report by the National Assembly’s Finance committee has revealed.
According to the report, the troubled lender has been surviving on emergency loans from the Central Bank of Kenya (CBK), commonly known as the reverse repo facility.
“In order to mitigate its liquidity constraints, the bank has been borrowing from the Central Bank of Kenya through the reverse repo to stabilise its operations” Mwalimu National Sacoo chief executive officer Kenneth Odhiambo said in a submission to the committee.
Spire’s Bank’s repo balance was Ksh1.3 billion and the lender’s position at 8.91 percent against a statutory requirement of 20 percent as at December 31 last year.
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Mwalimu Sacco, which owns a 75 percent stake, has been supporting the lender by converting deposits into equity or share capital and daily liquidity injection.
However, Mwalimu Sacco is now not willing to come to the aid of the bank, which requires a Ksh2 billion capital injection. CBK has also refused to help the troubled lender. Despite approving the lender’s operational model, CBK has insisted that it should continue with the repo facility.
Mwalimu Sacco on the other hand has urged the Bank to find a strategic partner to inject cash, or push on for a CBK loan to turn things around.
MPs on their side have urged the regulators to give Spire Bank enough time to try and turn things around. The regulators have given the bank up to June 2022 to solve its problems.
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“Central Bank of Kenya and the Sacco Societies Regulatory Authority should give the bank adequate time to find a strategic investor,” the committee said.
“Additionally, the Ethics and Anti-Corruption Commission and the Directorate of Criminal Investigation carries out investigation immediately to establish whether there was any foul play during the purchase of the bank and the current situation of the bank,” the committee added.
A Dubai-based Singaporean fund last week made a new offer for the purchase of Spire Bank. Feonirich Investment Pte Ltd last Thursday handed the Mwalimu Sacco board an irrevocable expression of interest offer for the purchase of the teachers’ bank.
Mwalimu Sacco bought the bank from deceased tycoon Naushad Merali, who within days withdrew Ksh1.7 billion, sending depositors into a panic mode pushing them to withdraw their deposits.
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