Jittery teachers seek Spire Bank’s bailout from CBK
By Josphat Thiong'o | October 13th 2021
Teachers want the government to bail out Spire Bank, formerly Equatorial Commercial Bank (ECB), which is facing financial difficulties -with their Sh2.6 billion savings at stake.
In a petition tabled in Parliament by Alego-Usonga MP Sam Atandi, the teachers sought the intervention of the Central Bank of Kenya (CBK), noting that Spire Bank has since 2014 been dogged with financial challenges.
This is after teachers, through Mwalimu Sacco, in 2016 bought ECB Bank - becoming the majority shareholder. It acquired a 75 per cent stake at a cost of about Sh2.6 billion.
Notably, the buy-out by Mwalimu Sacco came against the backdrop of ECB posting a pre-tax loss of Sh326.4 million in the year ending December 31, 2014.
“As a key stakeholder in Mwalimu National Sacco, teachers are concerned that, should the financial woes facing Spire Bank be left to continue, the lender may end up being wound up, and sink with their hard-earned savings,” read the petition in part.
“The petitioners believe that CBK has a role to play in assisting Spire Bank to overcome the financial challenges it is currently facing, thus preventing its imminent collapse."
The petitioners observed that CBK was bound by law to intervene given the State of affairs at Spire Bank.
Teachers, he noted, form some sizable public sector employees.
The teachers premised their petition on CBK's rescue of other financial institutions facing similar challenges, which saw them regain financial stability.
They urged CBK to extend credit facilities and other financial support to the lender.
“To the best of the petitioner's knowledge, the issues in respect of which this petition is made are not pending before any court of law or a constitutional or legal body. Therefore, your humble petitioners pray for the intervention of this House, through the Departmental Committee on Finance and National Planning, to urgently look into the senses raised in this Petition,” stated Atandi.
The petitioners are now calling on parliament to direct the apex bank to furnish it with a comprehensive report outlining efforts if any, that the CBK has made or is making to extend financial support to Spire Bank to forestall its imminent collapse.
It further wants the Departmental Committee on Finance and National Planning to order CBK to urgently extend financial intervention to Spire Bank.
“The committee may also make any other recommendations that it may deem fit in addressing the concerns of the petitioners. Your petitioner will ever pray,” concluded the statement.
The development comes barely a fortnight after delegates of the giant Mwalimu National Sacco met to determine the fate of the Sacco’s subsidiaries.
Top on the agenda was a proposal by the Sacco’s board to put Spire Bank up for sale to a strategic investor in a deal that will see Mwalimu Sacco retain a minority interest.
The giant Mwalimu Sacco, which is the largest in Kenya by assets, bought Spire Bank from the late businessman Naushad Merali in 2016.
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 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.
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