Equity Bank plan to buy struggling Spire Bank is the best deal available in the market, the Central Bank of Kenya told Parliament yesterday.
CBK governor Patrick Njoroge told MPs that the deal is the best chance to protect the interest of depositors and creditors of Spire Bank. Mwalimu Sacco, which owns Spire Bank, inked a deal with Equity Bank to save the tier three lender from liquidity challenges.
The agreement will see Mwalimu Sacco pay Equity an additional Sh422 million 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.
Dr Njoroge said time has come to ensure stability of Spire Bank through the buy out deal with Equity.
He said the CBK continues to urge a quick conclusion of the Equity Bank and Spire Bank deal saying it believes it is possible.
The High Court in October froze Equity Bank’s acquisition of Spire Bank until a deal is reached with the employees. “I believe this is the best chance for the teachers and I am happy Equity Bank is ready to clean up the mess,” Dr Njoroge told the Finance and Planning committee.
The CBK boss told lawmakers that Equity is interested in Spire because “it sees the investors in the bank as people who are its own customers and also in order to get the best outcome for the Mwalimu sacco.”
Dr Njoroge said time had come for the CBK to act to protect the interest of depositors and creditors and ensure stability.
Dr Njoroge said the CBK had assisted the teachers bank with a Sh700 million liquidity in exchange for Treasury BIill from Spire Bank. The revelations contradict earlier reports that the regulator had pumped in Sh1.7 billion in Spire Bann in transactional costs.