Parliament to probe CBK support to cash-strapped Spire Bank

What you need to know:

Parliament has opened an inquiry into efforts by the Central Bank of Kenya (CBK) to extend emergency support to cash-strapped Spire Bank to forestall its imminent collapse.
In May, CBK governor Patrick Njoroge said the regulator would grant the institution access to its discounted loan facility if it falls short of cash for its day-to-day operations.

Parliament has opened an inquiry into efforts by the Central Bank of Kenya (CBK) to extend emergency support to cash-strapped Spire Bank to forestall its imminent collapse.

The National Assembly’s Finance committee is looking into a petition asking MPs to direct the banking sector regulator to urgently extend financial support to the teachers-owned bank pursuant to sections 34 and 36 of the CBK Act.

The inquiry follows a public petition filed by Alego Usonga MP Samuel Atandi on behalf of millions of teachers who invested in Spire Bank through Mwalimu National Sacco Society Limited.

Mr Atandi now wants Parliament to direct the CBK to furnish it with a comprehensive report outlining efforts, if any, it has made or is making in terms of extending financial support to secure the savings of millions of teachers and other depositors across the country.

“Your petitioners humbly pray that the House, through the committee on Finance and National Planning urgently look into issues raised and recommend that the CBK extend financial intervention to Spire Bank limited to forestall imminent collapse, just like CBK has previously done for financial institutions which had similar financial challenges,” Mr Atandi said on behalf of the petitioners.

In May, CBK governor Patrick Njoroge said the regulator would grant the institution access to its discounted loan facility if it falls short of cash for its day-to-day operations in the short-term, including meeting customer demand.

The teachers’ sacco spent more than Sh2.4 billion between 2015 and last year to take full ownership of the bank, previously trading as Equatorial Commercial Bank, from late businessman Naushad Merali.