More losses kept wiping out Spire Bank’s capital in the year ending December 2020. This left Spire Bank with a huge negative asset base of Sh. 1.8 billion. This meant Sh. 4.79 billion customer deposits were put at risk.
The Bank which is fully owned by the Mwalimu National Sacco is facing a crucial search for new capital because its losses have meant that all the minimum capital adequacy ratios have been breached by large margins.
The Sacco purchases the majority of shares in the Bank in 2015 when the lender was called Equatorial Commercial Bank.
There is a rule that Banks, must maintain a statutory minimum of Sh. 1 billion as core capital. Spike Bank’s core capital is at negative Sh. 2.63 billion. This means that the bank needs Sh 3.6 billion to comply with the requirements of a lender.
In the last two years, Spire Bank’s accumulated losses of Sh. 8.4 billion depleted shareholder funds which are now at negative Sh. 1.8 billion.
“The statement of financial position and statement of comprehensive income are extracted from the Bank’s financial statements,” said acting managing director Brian Kilonzo in a notice to the Daily Nation on Friday.
The lender had losses of Sh. 1.2 billion for the year ending December 2020 from a Kshs. 472 million loss in 2019.
The bank is not lending with negative capital anymore as issued loans shrunk from Sh. 3.3 billion in 2019 to Sh. 2.5 billion at the end of 2020.
Spire Bank only made a Kshs. 346 million interest income from the government and customer loans and made a Kshs.54 million loss from non-interest incomes due to foreign exchange positions that the bank took.
Spire bank’s value of defaulted loans is at Sh. 2.7 million. This is more than its total loans book.