The high court of Kenya has frozen Equity bank’s acquisitions of Spire Bank as disputes between the troubled lender and its employees soar.
In her ruling, employment and Labour Relations Court judge Maureen Onyango said the lenders should maintain their status quo until a deal is agreed upon with the employees who argued they were not informed about the winding up of Spire bank.
“That in the meantime, status quo as of the date of this court’s orders to be maintained until either party agrees on the suitable undertaking, and is signed by the respondent (union),” Justice Onyango said.
The case will be mentioned on October 31.
Equity Group Holdings had signed an Assets and Liabilities Purchase Agreement with Spire Bank, a deal that would see Equity group take over 945 million shillings in loan assets from struggling Spire Bank and deposit liabilities of 1.3 billion shillings.
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 bank has accumulated a loss of more than 9 billion Kenya shillings across six years forcing it to drain all of its shareholder funds.
In its unaudited half-year financial report as of June 2022, Spire Bank reported total customer deposits liabilities of 1,938 million shillings and net loans and advances to customers of 1, 745 million shillings together with additional statutory loan loss reserves of 800 million shillings.
In this transaction, Equity Bank Kenya Limited is acquiring approximately 20,000 deposit customers holding deposits of approximately 1,322 million shillings. Similarly, Equity Bank Kenya is likely to acquire approximately 3,700 loan customers that have outstanding loan balances reported at a net carrying value after statutory loan loss provisions of 945 million shillings by Spire Bank in its unaudited half-year financial statements as of 30 June 2022.
The Chairman of Mwalimu National Sacco, Joel Gachari said upon completion of the proposed transaction on 30th November 2022, all existing depositors of Spire Bank (other than remaining deposits from Mwalimu National Sacco) will become customers of Equity Bank Kenya.