The heavy losses that have wiped out Spire Bank's capital in the financial year ended December 2018 inspires little confidence in the future of the institution -- and is deeply worrying.
The bank, which is 75 percent owned by Mwalimu National Sacco, urgently requires new capital as its losses have seen it breach the minimum capital adequacy requirements by large margins.
The heavy losses that have wiped out Spire Bank's capital in the financial year ended December 2018 inspires little confidence in the future of the institution -- and is deeply worrying.
The bank, which is 75 percent owned by Mwalimu National Sacco, urgently requires new capital as its losses have seen it breach the minimum capital adequacy requirements by large margins.
This is quite significant from a regulatory point of view: The bank is the only lender operating with a negative asset base, with its core capital at negative Sh1.6 billion against a requirement of Sh1 billion. It is even worse; that just a small fraction of the bank's deposits (as per the maximum deposit guarantee of Sh100,000) is insured. In all this, the Sh6.6 billion that the bank holds in customer deposits is at stake -- with a substantial amount being teachers’ savings.
It is surprising that the regulator, the Central Bank of Kenya, has not said a word while all this is happening.
The CBK should let the public know why the bank is still operating the way it is, even with the serious breach of capital requirements.
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