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By Phyllis MUCHOKI
Equity Bank has will proceed to acquire Spire Bank, following a successful bidding expected to see one of the country’s largest lenders take control of cash-strapped teachers-owned bank.
The deal – announced last week will see Mwalimu Sacco, which owns Spire Bank, pay Equity an additional Sh1.7 billion to cover liabilities.
The top-tier lender will take over just under Sh900 million in assets and Sh1.3 billion in liabilities. The half-a-billion-shilling difference, employee costs, claims and litigations amounting to Sh1.7 billion will be borne by Mwalimu Sacco.
Equity becomes the latest tier one bank to buy a struggling lender in search of new growth opportunities after KCB, which recently acquired the National Bank of Kenya (NBK).
Mwalimu Sacco CEO Kenneth Odhiambo told MPs early this year Spire Bank had requested funds from the CBK, which refused to give the bank a long-term interest-free loan to recover.
The CBK has been providing short-term liquidity of up to Sh1.3 billion through Reverse Repo (Repurchase Agreements), which is short-term and not enough to revive the lender.
The article was first published by Business Daily