The Kenya Deposit Insurance Corporation has warned it will not insure deposits at Spire Bank anymore, marking the end of an era for the troubled lender.
In a gazette notice dated September 4, the agency which guarantees bank deposits of up to Sh500,000 per account, said Spire Bank is no longer a member of the Deposit Insurance Fund.
“Notice is given under section 25 (2) of Kenya Deposit Insurance Act, 2022 that Spire Bank Limited, Certificate (CB/No. 0000047) has ceased to be a member of the Deposit Insurance Fund, with effect from the date of this notice,” reads the notice signed by KDIC’s chief executive Hellen Chepkowny.
“Members of the public are notified that any deposits collected by and/or on behalf of Spire Bank Limited shall not be protected.”
The notice formally marks the end of Spire Bank which transferred part of its assets and liabilities to Equity Bank after suffering a major capital shortfall.
A spot check by the Business Daily shows Spire Bank’s operations at Nairobi’s Koinange Street branch had ceased.
KDIC is mandated by law to implement a deposit insurance scheme for customers of member institutions, incentives for sound risk management, and prompt resolution of failed institutions.
Member institutions pay a fraction of their deposits to KDIC as insurance premiums. The KDIC acts as a risk mitigator to provide a safety net to deposits by protecting them against the loss of all their funds in the event of a bank collapse. The agency covers up to Sh500,000 per depositor in case of a bank failure.
Spire Bank’s depositors who did not move their deposits to Equity or another lender will not be insured and could suffer losses.
The Central Bank of Kenya approved Equity’s acquisition of certain assets and liabilities of Spire Bank Limited in January.
The takeover was initiated under the insolvency rule, where a quick acquisition was sought before bankruptcy and collapse.
The lender was unable to access cash from peer banks due to its financial challenges and had relied on support from its majority shareholder Mwalimu National Sacco.
Its deposits were in the hands of about 20,000 customers while the loans were spread out in about 3,000 accounts.
