Delegates of the giant teachers’ co-operative society, Mwalimu National Sacco, meet tomorrow to determine the future of the Sacco’s subsidiaries, including the loss-making Spire Bank.
Top on the agenda is a proposal by the Sacco’s board to put Spire Bank up for sale to a strategic investor in a deal where Mwalimu Sacco will still retain a minority interest.
The giant co-operative, which is the largest in Kenya by assets, bought Spire Bank from the late businessman Naushad Merali in 2015, hoping to gain a foothold in the commercial banking market.
However, the investment did not yield the desired results, and the teachers soon discovered that the bank was but a shell.
While the bank was clearly in trouble before the sale, matters were made worse when Merali withdrew his deposits amounting to Sh1.7 billion ($15.74 million) immediately after selling his stake. The huge withdrawal triggered panic, leading other customers to withdraw their deposits, further weakening the institution’s financial stability.
Mid this year, the sector regulator, the Sacco Societies Regulatory Authority (Sasra), directed the board chairman and chief executive officer to step aside to allow for investigation on the conduct of the Sacco business.
The chairman, Wellington Otiende, was replaced by James Oirere, while the place of the chief executive Alphonse Kaio was taken up by Kenneth Odhiambo – both in an acting capacity. Reached for a comment on the process, Mr Odhiambo declined to comment on the process.
“The board is determined to protect members’ investments. After we appraise the delegates of our efforts at the Special Delegates Meeting, we will duly give the public information on the process,” he said.