The deal will see Mwalimu Sacco, which owns Spire Bank, pay Equity an additional Sh1.7 billion to cover liabilities. The half-a-billion-shilling difference, employee costs, claims and litigations amounting to Sh1.7 billion will be borne by Mwalimu Sacco. 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.
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. The CBK has been providing short-term liquidity of up to Sh1.3 billion through Reverse Repo (Repurchase Agreements), which is short-term and not enough to revive the lender. The teachers have also been constrained by sacco laws to limit their exposure after they pumped billions of shillings into the bank over the years.