The Sacco said it is executing resolutions of an October annual general meeting where its members decided to either sell the bank or liquidate it.
Sources at the Sacco said a major local bank has been conducting due diligence and they are hopeful of closing the deal before the meeting.
Mwalimu has lost billions of shillings at Spire Bank forcing teachers to call for a stop of further losses by offloading the lender and withdrawing the Sacco letter of support.
Mwalimu Sacco wants to sell Spire Bank to a local lender by the end of March when the teachers Sacco members will meet for the yearly gathering of delegates to review performance.
The Sacco said it is executing resolutions of an October annual general meeting where its members decided to either sell the bank or liquidate it.
Sources at the Sacco said a major local bank has been conducting due diligence and they are hopeful of closing the deal before the meeting.
The sale is part of the Sacco turnaround plan shedding off loss-making ventures including Kisaju houses and two parcels of land in Juja estimated at Sh297 million in a bid to turn around the cooperative.
“The Sacco is currently engaging both regulators as well as potential entities to take over Spire Bank completely off Mwalimu National’s ownership,” John Ochieng Board Chairman said in a statement.
“By end of March 2022 the details of the transaction will be clearer and the Sacco would have surmounted this hurdle that has been elusive for a long while,” he said.
Mwalimu has lost billions of shillings at Spire Bank forcing teachers to call for a stop of further losses by offloading the lender and withdrawing the Sacco letter of support.
Sacco paid Sh2.4 billion to the late businessman Naushad Merali in a controversial transaction signed off in 2015 for a 75 per cent shareholding in the bank and bought the remaining 25 per cent in November 2020.
The Sacco had also made a Sh3.4 billion deposit which it could not withdraw without sinking the lender and so agreed to convert it into a credit line for the bank in exchange for a stake which helped the bank survive.
Mwalimu had also issued the regulators with a letter of support promising they would not let the lender collapse.
However, Teachers have changed tune following years of loss-making at Spire Bank that has drained resources from the lender and its owner and still sunk the Bank into negative core capital.
As a rule, all banks must maintain a statutory minimum of Sh1 billion core capital. Spire Bank’s core capital, however, stood at negative Sh3.41 billion as of September 30, meaning it requires Sh4.41 billion to comply with the requirements.
Mwalimu Sacco has linked Spire Bank’s current cash woes to a Sh1.7 billion cash withdrawal by the late Merali days after selling the lender to the Sacco, triggering a chain of fallouts that has pushed the lender to the brink of collapse.
Mr Merali’s huge withdrawal in 2016, an equivalent of a fifth of the bank’s Sh8.54 billion deposits at the time, prompted other panicky customers to cart away cash from the bank, Spire Bank’s top officials revealed in April during a session with a Parliamentary Committee probing the financial mess at the lender.
Spire Bank is currently desperate to shore up its capital after breaching all the minimum capital adequacy ratios set by CBK by large margins following years of erosion through losses.
