Naaman Ambunya, the chief executive of the Mwalimu National Sacco majority-owned Spire Bank has quit the troubled lender at a time it needs to turn around its struggling business.
The bank has tapped its former general manager, Onesmus Muia to replace Mr Ambunya in an acting capacity, the Business Daily has learnt.
In a letter to the bank chairman, Teresa Mutegi, Mr Ambunya underlined several challenges the bank faces, mainly delayed recapitalisation.
“I summarise the key matters confronting the bank that require immediate resolution—otherwise the financial sustainability of the bank is at a huge risk — which, have been presented before in board committees since 2017,” said Mr Ambunya.
“They include immediate stable funding without which deposit mobilisation efforts are unlikely to yield sufficient results for financial sustainability. The deposits held at the bank are largely for working capital and are very short term. The customers use the funds on a daily basis.”
He also cited falling interest income from dwindling lending, leading to shrinking margins, likely increase in losses and capital erosion.
In the June 27 letter, Mr Ambunya argued the lender’s Sacco business model is at risk of compromising its business continuity, unless more capital is deployed.
A reducing and deteriorating balance sheet and mounting losses could easily lead to “solvency challenge” and subsequently liquidation.
“From the beginning of the year, customer deposits net growth was on a rising trend and by the end of February we had hit the Sh6 billion mark while the shareholder deposits (Sacco) had consistently been on a downward trend,” he says in the letter.
The bank has a core capital of negative Sh1.6 billion. The minimum statutory capital is meant to be Sh1 billion.
Apart from fresh talent, the CEO had also asked for capital injection, which could be done by Saccos or a strategic investor.
“With these trends, the bank has a few options since shareholder funding is no longer tenable. Either implement the Sacco model by asking Saccos to buy in as is or offer the bank for sale either through the Central Bank of Kenya (CBK) or private advertising the Consolidated Bank way,” he says.