Teachers are imploring the government to bail out Spire Bank amid the bank’s financial struggles with more than Sh. 2.6 billion of teachers’ savings at stake. The Spire Bank was formerly known as Equatorial Commercial Bank (ECB) before the change of name.
Mwalimu Sacco, the largest Sacco in Kenya by assets, bought the Spire bank in 2016 from the late businessman Naushad Merali.
The teachers want the Central Bank of Kenya’s (CBK) to intervene and save the Spire Bank which has been plagued with financial problems.
In 2016, teachers bought the ECB Bank through Mwalimu Sacco. Teachers paid Sh. 2.6 billion to acquire the bank making them the majority shareholders.
The ECB had posted a loss of Sh. 326.4 million before tax in the year that ended on the 31st of December 2014.
“As teachers are a key stakeholder in Mwalimu National Sacco, they are concerned that if the financial problems that Spire bank is experiencing continue, the lender might be eventually wound up and collapse together with the tutor’s savings,” read part of the petition.
The petitioners believe that CBK has a constitutional responsibility to intervene owing to financial problems facing Spire bank.
The petitioners argued that the issue is a crucial one given that teachers form a major part of public sector employees.
The teachers’ argument is that the CBK has bailed out other financial institutions that have faced similar challenges before.
They urged the CBK to extend the credit facilities and further financial support to the bank.
“To the best knowledge of the petitioner, the issues in respect of which this Petition is made are not pending in any court of law or constitutional or legal body. Therefore your humble petitioners pray for the intervention of this House, through Departmental Committee on Finance and National Planning to urgently look into the senses raised in this Petition,” said Atandi.
The petitioners urged parliament to direct the apex bank to provide a comprehensive report outlining efforts if any, that the Spire Bank has made of is making to give financial support to Spire Bank to prevent its imminent collapse.
The petitioners also want the Departmental Committee on Finance and National Planning to direct CBK to extend financial intervention to Spire Bank urgently.
Two weeks before the petition, delegates from Mwalimu National Sacco held a meeting to discuss the future of Sacco’s subsidiaries.
The main agenda of the proposal was that the board’s Sacco putting Spire Bank up for sale to an investor in a deal that could have seen Mwalimu Sacco maintaining a minority stake.
However, teachers late came to know that the investment was not going to help them since the bank was almost on its knees.
The problems of the bank only skyrocketed after Merali withdrew his deposits which amounted to Sh 1.7 billion ($15.75 million) after he sold his stake.
The withdrawal led to panic among other customers who withdrew their deposits and weakened the financial stability of the bank even further.