Mwalimu Sacco CEO Robert Shibutse (left) receives a handing over report from former CEO Joshua Ojall at the Sacco’s Nairobi offices. PHOTO | COURTESY
What you need to know:
Mwalimu Sacco members had earlier mandated the management to go ahead with the purchase of a stake in the bank at a special general meeting held earlier in the month.
Mwalimu Sacco is in the process of acquiring a 50 per cent stake in Equatorial Commercial Bank (ECB) for an undisclosed amount, the Naushad Merali-associated lender has confirmed.
ECB said the two lenders are in talks but did not disclose finer details including the transaction price. “We cannot comment until the deal is completed,” ECB chief executive Sammy Itemere told the Business Daily.
Mwalimu Sacco members had earlier mandated the management to go ahead with the purchase of a stake in the bank at a special general meeting held earlier in the month. Although Mwalimu Sacco is buying a 50 per cent stake it has been planning to buy a fully-fledged bank and make it a subsidiary as part of its four-year strategic plan.
“One of the flagship projects in the society’s strategic plan for 2014-2018 is to establish a commercial bank as a subsidiary fully-owned by the society. This is in line with the current strategic objective of the society of expanding business opportunities,” says Mwalimu Sacco’s 2013 annual report.
Owning a bank will enable the sacco to collect deposits from beyond its membership, access funds at lower rates, venture into trade finance and offer its members ATM services.
Kenya’s largest sacco by assets plans to offer mortgage facilities to enable them buy plots in the 35-acre plot it has bought in Juja and another 20-acre plot in Kitengela.
The sacco was started in 1974 and draws membership from primary, secondary school teachers and their relatives. As at March this year, it had 57,521 members.
Acquiring a banking licence has been the desired route for saccos that want to grow loan books beyond membership. Saccos are limited to advancing credit to members unlike banks that have the leeway to lend to a wider customer base.
Unaitas Sacco has also opted to transform into a fully-fledged bank as well as list on the Nairobi Securities Exchange within the next four years. Unaitas has already hired Faida Investment Bank as the lead transaction advisor to restructure its capital and business.
Johnson Nderi, corporate advisory and finance manager at ABC Capital, said the teachers’ sacco bid will result in a symbiotic relationship between the two lenders. “Mwalimu Sacco will get the banking licence while ECB will get more clients,” said Mr Nderi.
ECB loans and advances to customers stood at Sh9.02 billion as at 2013, which is less than half the Sh20.96 billion Mwalimu Sacco advanced to customers over the same period. Mwalimu Sacco had a bigger asset base at Sh24.54 billion against ECB’s Sh15.56 billion.
The teachers’ sacco asset base makes it Kenya’s largest according to data from the Sacco Societies Regulatory Authority (Sasra). Prior to the acquisition announcement Mwalimu Sacco hired Robert Shibutse as chief executive. Mr Shibutse was an executive director at ECB and left in June to head Mwalimu Sacco.
ECB was formed in 2010 after Equatorial Commercial Bank merged with Southern Credit Banking Corporation. The commercial bank is part of the Sameer Group of Companies.
