Senior management team and the Board of Directors at Spire Bank could soon be facing multi-pronged investigations over possible internal fraud as the bank’s future liquidity soundness remains shaky with inadequate deposits and massively dwindling profit margins to sustain operations.
An internal situational report in our possession paints a grim picture exposing Sh4billion worth of customer deposits to risk and non-performing loans to a tune of Sh3.9billion.
Effectively, an internal audit shows the teachers’ bank is facing self or forced liquidation where Mwalimu National Sacco controls a majority stake of 75 per cent and while businessman Naushad merali owns 25 per cent.
Insiders’ privy to the imminent crisis intimated that the looming collapse has been occasioned by extra-ordinary high losses arising from high loans impairments due to uncontrolled level of non-performing loans (NPLs) leading to profit crisis.
Mwalimu National Sacco acquired majority stake in Equatorial Commercial Bank owned by Merali before rebranding to Spire Bank through Sh2.4billion injection of teachers savings that included buying some interests from Merali.
Since then, bank has never paid any dividends since Mwalimu became a shareholder four years ago further sinking teachers’ savings down the drain.
A month ago, immediate former Spire Bank Managing Director Namaan Ambunya tendered his resignation to the board.
“I am in doubt that there’s sufficient shareholder capacity to rebuild the bank afresh.With this background understanding, I offer to resign from the position of Managing Director.” Ambunya said in his resignation letter dated June 27, 2019.
On July 8, 2019, four bank shareholders petitioned Central bank of Kenya (CBK) to investigate claims of corruption and abuse of office against one of the troubled bank’s non-executive director.
“With these trends, the bank has a few options since shareholder funding is no longer tenable. The situation is unsustainable without a substantive stabilization fund immediately.” An internal correspondence to the board dated June 27, 2019 reads in part.
Bank records shows by February this year, the customer deposits hit the Sh6billion but the shareholder’s deposits have been consistently on a downward trend.
As of June 25, 2019, Mwalimu National Sacco had deposits amounting to sh171million, Sh4billion owned by customers while Sameer Investment Group owned by Merali had deposits amounting to Sh90million.
“Immediate stable funding, without which 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. The key outcomes of the above issues are deteriorating balance sheet size and quality, continuing losses leading to profit crisis and diminished capital and liquidity.” The report shows.
The bank has fallen short of the CBK requirement for lenders to have a core capital of over Sh1billion raising fears of possible closure like other lenders that have gone under notably Chase bank and Dubai Bank.
Through a petitioned to the CBK signed by four bank shareholders; Joseph Koech, Mary mwilu, Charles Mwaniki and Kenneth Otieno, they accuse Christine Sabwa of gross corruption and abuse office.
The appeal was also copied to the Directorate of Criminal Investigations, the Ethics and Anti-Corruption Commission, Kenya Bankers Association, Spire Bank and Mwalimu Sacco.
“We have given our lawyers strict instructions to institute legal proceedings against her if she is not relieved of her duties as a director of the bank within seven days from the date of this letter thereof.” The petition received by CBK on July 11, 2019 reads in part.
The bank has thirteen branches countrywide majority domiciled within Nairobi.