Teachers throw life-line to Spire bank

The lifeline is represented in a fresh conversion of deposits into share capital.

According to documents seen by Citizen Digital, Mwalimu National Sacco converted teacher’s deposits into share capital worth Ksh.3.4 billion.

The conversion increases the bank’s authorised share capital to Ksh.9.2 billion.

The capital release is seen by the bank as a key plank in its revival as it presently sits in the red including breaches to regulatory capital and liquidity adequacy levels.

For instance, the conversion will lift the lender’s core capital from a deficit of Ksh.4.4 billion.

Even so, Spire Bank will still require a minimum of Ksh.1 billion in to bring its core capital in line with the requirements of the Central Bank of Kenya (CBK).

Having partly plugged the hole however, Spire is optimistic that the fresh capital injection will make the bank attractive to a potential investor or buyer.

Without the injection, a new investor in the bank would have been required to first plug the Ksh.4.4 billion hole before putting in place any growth or expansion plans.

Spire Bank is wholly owned by the Mwalimu National Sacco which acquired the lender, then the Equatorial Commercial Bank, from businessman Neushad Merali in 2015.

The teacher owned Sacco is however keen on disposing of the lender or dropping a majority stake in the bank after consecutive years of loss making since its purchase.

Across nine months to September 2021, the bank posted an expanded loss of Ksh.818.8 million from a loss of Ksh.783.6 million in a similar preceding period.

The bank has an asset size of Ksh.4.2 billion including Ksh.2.1 billion in net loans and advances to customers.

Since acquiring the bank, the teachers have converted deposits equal to Ksh.1.7 billion.