The push to steer Spire Bank on the path to profitability has received a shot in the arm after the main shareholder, Mwalimu National Sacco, turned Kes3.4 billion worth of deposits into share capital.
The move implies that the giant teachers Sacco has increased the authorized share capital of Spire Bank to Kes9.2 billion from Kes5.8 billion.
The teachers’ Sacco first acquired a 75 percent stake in the lender, then running as Equatorial Commercial Bank, and owned by late businessman Naushad Merali.
In 2020, the Sacco acquired the remaining 25 percent stake, offering it full control of the third-tier lender.
According to the bank disclosures, since 2015 shareholders have converted deposits equal to Kes1.7 billion.
The new capital injection is expected to help the bank meet the Central Bank of Kenya’s regulatory requirements on capital liquidity while at the same time positioning the business optimally as an attractive option for potential investors and or buyers.
CBK provisions require that lenders maintain liquidity well above the minimum statutory ratio of 20 percent.
The financial institution has also embraced cost-cutting measures, austerity initiatives, and aggressive loan recovery plans to tame costs as the management steers it back to profitability.
Last year, staff costs went down by 15 percent to Kes331 million after headcount reduced to 142 from 165 while occupancy costs eased on account of better utilization of office space.
Acting Spire Bank managing director Brian Kilonzo says the lender has been engaging a strategic investor either through equity or debt arrangement as a long-term strategy.
The Kes3.4 billion capital injection will also help shore up customer confidence which will go a long way in supporting the bank’s other deposit mobilization initiatives.