A group of teachers wants the National Assembly to intervene and save troubled Spire Bank from collapsing.
Petitioners representing Mwalimu National Sacco Society Limited have asked MPs to recommend that Central Bank of Kenya extends financial support to Spire Bank Limited “to forestall its imminent collapse.”
In a petition presented to the House by Alego Usonga MP Samuel Atandi, the teachers said CBK should intervene the same way it has done to financial institutions which faced similar challenges.
“The petitioners verily believe that the CBK has a role to play in assisting Spire Bank Ltd to overcome the financial challenges it is currently facing thus preventing its imminent collapse,” Atandi said.
The petitioners argue that CBK is mandated under the Central Bank of Kenya Act to ensure, among other things, liquidity, insolvency and proper functioning of a stable market-based financial system.
They also want MPs to direct CBK to furnish the Parliament with a comprehensive report outlining efforts, if any, that have been made or are being made in extending financial support to Spire Bank.
Spire Bank Limited, formerly known as Equatorial Commercial Bank (ECB), was established as a finance company in 1983.
On October 10, 2014, Mwalimu National Sacco Society Limited signed an agreement to buy the banking and investment arm of Equatorial Commercial Bank, which rebranded as Spire Bank.
Despite public concern against the risk of investing teachers’ savings in ECB, which had just posted a pre-tax loss of Sh436 million in the year ending December 31, 2014, Mwalimu Sacco proceeded with the controversial buyout of the bank and went ahead to become the majority shareholder, having acquired 75 per cent stake at an estimated cost of Sh2.6 billion in 2016.
Nominated MP Wilson Sossion noted that Kenyan workers through Saccos are the most vibrant investors in the country's economy.
“In fact, if we get to other nations, there are no Saccos. Workers do not have Saccos and their good work in this country should not be derailed by such unscrupulous activities within the financial sector. Therefore, as the Departmental Committee on Finance and National Planning looks into that, it will be imperative and important to put the responsibility on the CBK,” Sossion said.
Funyula MP Wilberforce Oundo said those involved in fraudulent transfer and takeover of the bank using teachers’ hard-earned money should be brought to book.
“Probably, it is important that, at any given time, there ought to be adequate due diligence before such kind of a huge transaction happens in this country,” Oundo said.
Speaker Justin Muturi referred the matter to Committee on Finance and National Planning.
Edited by P.O
