Equity Group Holdings, a leading financial services group led by Kenyan multimillionaire businessman James Mwangi, has announced plans to acquire Spire Bank.
Spire Bank is a medium-sized financial institution based in Nairobi.
The acquisition is part of the group’s strategic efforts to expand its operations and diversify its earnings base.
The announcement comes as the leading financial services group completed negotiations to acquire Spire Bank, a teachers-owned bank, in a deal that will see it integrate the financial services provider into its operations and put it on the path to stability after years of financial crisis.
The agreement, which will be signed on Mon., Sept. 12, will see Mwalimu Cooperative Savings & Credit Society (Mwalimu Sacco), which owns a majority stake in Spire Bank, pay an additional Ksh1.7 billion ($14.1 million) to Equity Group to offset liabilities such as employee costs, claims, and litigation.
Mwalimu Sacco is an institutional Sacco made up of Teachers Service Commission (TSC) employees from elementary, secondary, and tertiary institutions throughout Kenya, the East African Community’s largest economy.
Equity Group, which has the financial and managerial strength to put Spire Bank back on track and pull it out of its recent financial difficulties, will get a good deal by accepting teachers’ deposits, as well as Ksh1.3 billion ($10.8 million) in liabilities and nearly Ksh900 million ($7.48 million) in assets linked to Spire Bank.
Despite a difficult macroeconomic environment that has impacted the cost of living for teachers and other workers in East Africa, Spire Bank has pursued a turnaround based on lower costs, loan recoveries, and the conversion of shareholder deposits into equity.
Despite uncertainty about its future and constrained lending due to low capital, the bank was able to reduce its half-year net loss by 21 percent to Ksh403 million ($3.35 million) in the first half of 2022.
The acquisition may present additional challenges and opportunities for Equity Group, which reported profits in excess of Ksh24 billion ($200 million) in the first half of 2022.
The group’s profit rose 36 percent from Ksh17.9 billion ($149.3 million) in the first half of 2021 to Ksh24.4 billion ($203.6 million) at the end of the first six months of 2022.
The Kenyan lender stated that its half-year results reflect a continued digital transformation, with 99 percent of all customer transactions now taking place outside the branch network.
