The Sacco CEO Kenneth Odhiambo said they have agreed to terms with a financial institution willing to buy the lender.
Mr Odhiambo said the deal was an asset purchase agreement where the counterparty will take over assets and their liabilities rather than injecting in money through an equity purchase.
Mwalimu Sacco held their delegates meeting on Saturday where the Teacher Sacco reiterated their commitment to sell the troubled lender and exit non-core businesses.
Mwalimu Sacco is waiting for regulatory approvals to conclude the sale of troubled Spire Bank to a local lender by end of March.
The Sacco CEO Kenneth Odhiambo said they have agreed to terms with a financial institution willing to buy the lender and are waiting on the Sacco Societies Regulatory Authority and the Central Bank of Kenya approvals to finalise the deal.
Mr Odhiambo said the deal was an asset purchase agreement where the counterparty will take over assets and their liabilities rather than injecting in money through an equity purchase.
“We want to have a quiet exit.It is not an equity acquisition because the bank has zero value. What we are doing is figuring how to exit the business without the Sacco incurring extra costs because the members decided we do not want to put more money into the bank,” Mr Odhiambo said.
Mwalimu Sacco held their delegates meeting on Saturday where the Teacher Sacco reiterated their commitment to sell the troubled lender and exit non-core businesses.
Mwalimu has lost billions of shillings at Spire Bank forcing teachers to call for offloading the lender and withdrawing their letter of support to the Sacco.
The 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.
Teachers are selling the bank together with loss-making ventures including Kisaju houses and two parcels of land in Juja estimated in a bid to turn around the cooperative.
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.
