Mwalimu SACCO Waiting for Regulatory Approvals to Sell Spire Bank

Mwalimu SACCO is yet to conclude the sale of Spire Bank to a local financial institution by the end of March following the bank’s struggle to remain afloat amid the  9.1-billion-shilling loss incurred in September 2020.

According to the SACCO’s management, the matter now lies between the two regulators that is the Central Bank of Kenya (CBK) and the SACCO Societies Regulatory authority (SASRA), to give approvals to finalize the deal, adding that they have inked a deal with a financial institution willing to buy the lender.

The SACCO CEO Kenneth Odhiambo said that the deal was an asset purchase agreement where the acquirer will take over assets and their liabilities rather than injecting in money through an equity purchase.

In an official statement dated January 12, 2022, Mwalimu SACCO chairman John Ochieng said the SACCO was laying down some plans to take the Bank out of its possession by way of sale of liquidation.

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‘’The end game of the strategy is to take the bank off the SACCO’s hands by March 2022 so that Mwalimu National SACCO can focus on its core business of mobilizing members’ savings and offering access to credit. It is time for the SACCO to cut its losses emanating from the Spire Bank venture and that must be done now,’’ Mr. Ochieng said.

Spire Bank has been owned by Mwalimu National SACCO since 2015 after it was acquired from businessman Naushad Meralli. It has been involved in frequent losses making it a sour investment for teachers. The teachers are now keen to cut their losses where they are planning to sell it together with other loss-making investments including Kisaju houses and two pieces of land in Juja.

The bank has accumulated a loss of more than 9 billion Kenya shillings across six years forcing it to drain all of its shareholder funds.

The bank has been in breach of the Statutory Capital Ratio by failing to maintain a statutory minimum of 1 billion core capital as required.  The Bank’s core capital stood at negative 3.41 billion shillings as of September 30 meaning it requires 4.41 billion shillings to comply with the requirements.

Article by Jane Muia