According to reports, Equity Bank has concluded negotiations to buy Spire Bank which has run into financial headwinds. This sets the stage for the signing of a deal that is expected to get the teachers-owned bank out of a financial crisis.
The deal will see Mwalimu Sacco, which owns Spire Bank, pay Equity an additional Sh1.7 billion to cover liabilities. Equity on the other hand will take over just under Sh900 million in assets and Sh1.3 billion in liabilities.
Under the deal, Equity will get a bargain onboarding teachers’ deposits and has the muscle to recover the Spire Bank’s bad books.
Spire Bank has been unable to access cash from peer banks due to its financial challenges. The bank has been begging for additional support from its majority shareholders Mwalimu Sacco and the CBK to allow it to earn money to meet expenses and recover losses. However, the teachers have been constrained by sacco laws to limit their exposure after they pumped billions of shillings into the bank over the years.
Equity becomes the latest tier one bank to buy a struggling lender in search of new growth opportunities after KCB, which recently acquired the National Bank of Kenya (NBK).
The Central Bank of Kenya (CBK) has agreed to financially back the deal in a bid to avoid a collapse of the lender and the ensuing banking crisis that saw three banks collapse within months just five years ago.