Treasury approves acquisition of Spire Bank by Equity Bank
In a gazette notice published by the Central Bank of Kenya on January 25, 2023, Treasury has declared that Equity Bank will be acquiring some of the assets and liabilities of Spire Bank Limited.
According to the notice, Spire Bank Limited’s shareholders approved the acquisition by Equity Bank (Kenya) Limited in a resolution at a general meeting held on September 8, 2022. On September 2, 2022, Equity Bank (Kenya) Limited’s shareholders approved a resolution approving the acquisition of certain assets and assumption of certain liabilities from Spire Bank Limited.
On January 24, 2023, the Cabinet Secretary for the National Treasury and Planning also gave his approval for the purchase. The deal will become official on January 31, 2023.
“Pursuant to section 9 (1) of the Banking Act, the Cabinet Secretary for the National Treasury and Planning on the 24th January, 2023, approved the acquisition of certain Assets and Liabilities of Spire Bank Limited by Equity Bank (Kenya) Limited. The acquisition shall take effect on 31st January, 2023. Dated the 25th January, 2023,” the gazette notice read.
This acquisition is viewed by Equity Bank (Kenya) Limited as a strategic move to grow its operations and clientele in the Kenyan market. The acquisition will help Spire Bank Limited, which has recently faced financial difficulties, by allowing it to offload some assets and liabilities.
Due to its precarious position, Spire Bank has been struggling with liquidity issues and has been forced to pursue a turnaround plan based on reduced costs, loan recoveries, and the conversion of shareholder deposits into equity.
Spire Bank reported total customer deposit liabilities of KES 1.9 billion in its unaudited half-year financial report as of June 2022, and net loans and advances to customers of KES 1.7 billion. These figures include additional statutory loan loss reserves of KES 800 million, which lower the net loan and advances after applying KES 945 million in loan loss provisions.
In this deal, Equity Bank Kenya Limited will procure about 20,000 deposit customers with a total balance of KES 1.3 billion.