Equatorial Bank chief out as Mwalimu seeks turnaround

The chief executive of Equatorial Commercial Bank (ECB) Sammy Itemere has left the institution, marking the first major change effected by the new majority owner Mwalimu Sacco.

Mr Itemere’s employment was severed in February, setting the stage for his replacement with an advert for the position on Wednesday.

He had held the post since May 2013 when he was hired by businessman Naushad Merali from Imperial Bank where he was the head of retail and SME banking.

Mr Merali, however, recently sold a 51 per cent stake to the teachers’ Sacco in a move that has led to the exit of Mr Itemere.

“ECB is currently looking to fill the position of managing director to provide executive leadership and direction to the organisation, guiding it to be the leading retail and SME bank in Kenya,” reads part of the advert by Deloitte which is recruiting on behalf of the lender.

Besides hiring the CEO, Mwalimu is expected to appoint other directors to the board of ECB to reflect its controlling stake.

The Sacco bought the stake for Sh1 billion and has moved to raise its equity to 75 per cent by investing an additional Sh1.5 billion in the business and to acquire extra shares from Mr Merali.

READ: Mwalimu Sacco gets green light to buy Merali bank

Mwalimu is the first Sacco to buy a commercial bank, setting a precedent for other Saccos that have been toying with the idea of converting into banks.

The purchase had almost come a cropper after Co-operative Alliance of Kenya (CAK) voiced its opposition to the deal, arguing that the Sacco management had ignored concerns raised by consultants Ernst & Young in their due diligence report and had not sought members’ approval to conduct the transaction.

Mwalimu is the largest Sacco in the country with a membership of 60,961 and savings of Sh18.3 billion. It intends to sell 40 per cent of Mwalimu National Holdings, the vehicle used to invest in ECB, to members.

ECB reported losses in 2009, 2010 and 2012 which was attributed to strained capital position given that Mr Merali – the majority shareholder – was not allowed to inject additional funds by the CBK.

The regulator barred additional investment by Mr Merali in the bank because his ownership was already higher than the maximum allowed to an individual.

Mr Merali is said to have owned 85 per cent of the lender against a legal limit of 25 per cent.

A commission set up to investigate the controversial deal gave a nod to the transaction and turned the tables on the complainant, the CAK, by calling for a competitive recruitment of its chief executive.