PROPOSED ACQUISITION BY EQUITY BANK(KENYA)LIMITED OF CERTAIN ASSETS AND LIABILITIES OF SPIRE BANK LIMITED

Mwalimu National Savings and Credit Cooperative Society Limited (Mwalimu National Sacco) hereby announces to its members and the public that Equity Bank (Kenya) Limited (EBKL) has entered into an Assets and Liabilities Purchase Agreement (the Agreement) with Spire Bank Limited (Spire Bank) for the purchase of certain assets and liabilities of Spire Bank (the Proposed Transaction).

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Mwalimu National Sacco Limited is the beneficial majority shareholder of Spire Bank Limited with a stake of 99.2% in the Bank. Spire Bank is licensed by the Central Bank of Kenya (CBK)to undertake the business of a bank under the provisions of the Banking Act.

EBKL is a subsidiary of Equity Group Holding Plc,a non-operating holding company licensed by the CBK that holds interests in banking subsidiaries in Kenya, Rwanda, Tanzania, Uganda, South Sudan and Democratic Republic of Congo and a Commercial Representative Office in Ethiopia. EGH has other subsidiaries in investment banking, insurance, telecom, fintech and social impact investments. EGH is listed on the Nairobi Securities Exchange and cross-listed on the Uganda Securities Exchange and the Rwanda Stock Exchange.

EBKL is licensed to undertake the business of a bank by the CBK under the provisions of the Banking Act(Chapter 4BB,Laws of Kenya)(the Banking Act).In the Bank Supervision Annual Report for year 2021 published by CBK,EBKL was ranked 2 out of 39 banks in terms of composite market share as of 31*December 2021 with market share of 13.57%. EBKL serves approximately 11.97 million customers through a wide array of digital channels supported by 190 branches. In its unaudited half year financial statements as of 30June 2022, EBKL reported total customer deposits of KES 522,753 million and net loans and advances to customers of KES 417,482 million.

Spire Bank is also licensed by the CBK to undertake the business of a bank under the provisions of the Banking Act. Spire Bank serves approximately 20,000 deposit customers and approximately 3,700 loan customers from 10 branches .In its un-audited half year financial report as of 30h June 2022,Spire Bank reported total deposit liabilities of KES 1,938 million and net loans and advances of KES 1,745 million together with additional statutory loan loss reserves of KES 800 million that reduce the net loan and advances after applying statutory loan loss provisions to KES 945 million.

On completion of the Proposed Transaction, all existing depositors in Spire Bank (other than remaining deposits from Mwalimu National Sacco)will become customers of EBKL that will take on the obligation of meeting these liabilities that amount to approximately KES 1,322 million as of 31* July 2022.Similarly,EBKL will take on all of Spire Banle’s loan customers on completion of the Proposed Transaction. The Agreement is, however, subject to conditions that are customary to transactions of this nature, including all regulatory approvals from amongst others, the CBK and the Sacco Societies Regulatory Authority, approvals from competition regulators, board and shareholder approvals of EBKL and Spire Bank

Until completion of the Proposed Transaction, Spire Bank will continue to operate normally and continue to meet its customers’ banking needs.

The Proposed Transaction is a step towards implementation of the members’ resolution during the Special Delegates Meeting held on 2-October 2021.

Thank you

Chief Executive Officer

Mwalimu National Sacco Limited

13*September 2022

Mwalimu SACCO plans to liquidate loss making spire bank by the end of the month after unnamed local financial institution showed interest.

Mwalimu SACCO chief executive officer Kenneth Odhiambo confessed that the move will see them exit the banking business following a decision that was also ratified during the annual delegates meeting held on Saturday.

“During the meeting, we looked at issues in terms of business model where from the current strategy ans set up, identify some of those areas we can reengineer and be able to generate more value to our money” said Odhiambo, who spoke in Mwalimu Sacco offices in Nairobi.

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Apart From troubled Spire Bank, other issues raised include investments in subsidiaries dealing in asset management and risk insurance brokerage that the Sacco is currently undertaking a resolution mechanism in terms of dealing with it.

The Senate Committee on Finance and Budget investigated the transaction last year seeking to know why teachers seemed to have been duped into an investment that failed Io generate revenue

The board blamed the controversial Sh3 billion sale of the troubled Spire Bank to Mwalimu National Sacco (MNS) on Naushad Merali for withdrawing all of his deposits amounting to Sh1.7billion im-mediately he sold his shares in the bank.

The CEO said yesterday that the board has already initiated discussion with a local entity in terms of how the assets and liabilities of the bank can be taken up.

We engaged a local entity and we have made progress in terms of engaging transaction advisors, cleared their work and done due diligence and the other entity has also engaged the transaction and legal advisors well cleared their work,” assured Odhiambo.

He also said they have held a meeting with the principal personalities interested in Spire bank and are now good to go in terms of concluding on the agreement

Our approach was to protect the depositors’ interest so that we have a quiet exit, you know financial service industry is very sensitive and if you do not protect the depositors’ interests and manage it in a way that does not preserve some confidence, it may have a contagion effect on the Sacco,” he explained.

“The progress is gone to almost the tail end so we are waiting for the two regulators to now okay in what we have agreed and move on with that,” he added.

On Mwalimu asset management, which is dealing with investments in real estate like Kisaju, he said measures were discussed in terms of in-flows of the asset properties like sell them off and have the money transited to members. Mwalimu Sacco has a membership of over 106,000.

“This year, we are looking at the economy rebounding in terms of growth…the asset base last year was about Sh61 billion and want to move it by another Sh35 billion this year. We are looking at a situation where we grow our loan books because that is the most key asset we have and leverage on technology” the CEO said.

Apart from liquidating Spire Bank, emerging issues from the delegates included having more investments offloaded so that the money can come back to the Sacco.

They also want to channel new cash into credit in a move that would increase their loans to total asset ratio to about 80 per cent which would excite revenue generation and enable them retain more surpluses to build on institutional capital.

Teachers across the country who are affiliated to Mwalimu national Sacco  can now have a sigh of relief from the burdens of remitting heavily in shares but gaining little in dividends. This relief has been effected by a changes in top leadership.

Kennedy Odhiambo Opiyo, who has been serving the SACCO in the capacity of the deputy chief executive officer, will now take over as the chief executive officer of the giant SACCO.

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Opiyo was appointed by the mwalimu sacco board of directors during a special meeting held on 31^st January 2022 after considering his capability profile in terms of qualification and experience.

Opiyo has taken over from Alphonse Kaio, who had been pushed out by the Sacco societies regulatory authority, SASRA, who took upon it to carry out probes following allegations of bad investment decisions that rocked the SACCO. Under the leadership of Kaio, the giant mwalimu national sacco experienced the most grievous turmoil that a SACCO of its calibre had never experienced. This saw not only delays in dividends, but also low percentages of upto 8%.

While members have been receiving their dividends under the past questionable regimes, this year they are expected to receive dividends under a new leadership headed by Opiyo.

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Sources closely related to the SACCO have confirmed Opiyo’s hands on and diligent character. They claim that with Opiyo, members’ dividends will not delay and that they are likely to be at not less than 10%.

Additionally, the sacco board unanimously expressed confidence in the new CEO and had hopes that its only him who can restore the former glory of the SACCO within the shortest duration. The board was seeking a solution to stop the huge member walk out and low registration experienced lately.

In partnership with Kenya Mortgage Refinancing Company (KMRC), Mwalimu National Sacco has rolled out affordable housing mortgage scheme at competitive pricing.

According to the Sacco, the Board approved roll out of the product through a refinancing scheme for purchase of residential houses at Kisaju Park as phase one (1) of the implementation of mortgage lending solution to all the Sacco Members.

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Mortgage FEATURES

Eligibility criteria for the housing mortgages

The eligible property to secure the loan must either be:

1. Owner occupied.

• Title residential properties
• Free–standing or apartment .
• Properties occupied by close relatives of owner.

2. “The title must be free from any delinquencies and encumbrances.
3. The maximum mortgage loan limit will be Ksh.4 Million.
4. The tenure of the collateral: Full ownership and if Leasehold with a minimum of 40 years to expiry of the lease.

The New loan product takes effect immediately in all Mwalimu National FOSA branches through the Business Loans officers.

For more details visit www.mwalimuinational.coop and our FOSA branches countrywide.

Mwalimu Sacco executives ignored all red flags and bought 75 per cent of the bank in one fell swoop.

In October 2014, Mr Naushad Noorali Merali, a billionaire who has made his money buying and selling off struggling companies held a meeting with executives from giant teachers sacco Mwalimu National Savings and Credit Co-operative Society, who were the targeted  buyers of equatorial bank .

Mr Merali, who was little known before, became famous in 2004, when he bought shares in Airtel, known as Kencell at the time, and sold them two hours later, walking away with a cool Sh2 billion profit.

That was the quickest billions ever made in the corporate world globally. Merali was in one room negotiating with Vivendi, a French firm that owned 60 per cent in Kencell, while the new buyer, Celtel, was in the next room, waiting for him. By then,  Sameer headquarters was on Nairobi’s Riverside Drive.

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After Mr Merali closed the buyout at around 7pm on a Monday night in March 2004, he simply crossed over to the next room, sold all the shares he had just bought from the French firm, and bounced out of the room at around 9pm the same night.

Surprisingly, 10 years later, teachers wanted to buy a bank from the same man. At the time, Mr Merali was the owner of Equatorial Commercial Bank, which has since been renamed Spire Bank.

With impossible ambitions, Mwalimu Sacco was determined to make history as the first sacco in East and central Africa to own a commercial bank. And they wanted to buy it from Mr Merali, at all costs. As he walked into the meeting in 2014, the tycoon, who describes himself a veteran businessman, knew he had allies in the giant Mwalimu Sacco team.

By then, the CEO of Mwalimu Sacco was Robert Shibutse, a former employee of Merali.  As CEO, Shibutse had taken over the role of marketing the transaction to thousands of teachers, who had entrusted him with billions of their savings. Shibutse did not need too much time convincing teachers to buy equatorial commercial bank.

The top SACCO executives ignored all the red flags that called for due diligence. When making such decisions, the buyer should pay 50 per cent of the negotiated price and then launch a detailed page-by-page, loan-by-loan audit of the books. The balance is only paid after the audit of the books is complete and the buyer is convinced they are not buying a dead bank. Mwalimu sacco never took that procedure into consideration since ambitions blinded the it.

Mwalimu Sacco executives, either too naïve or driven by self-interest, pushed  and bought 75 per cent of the bank at once at a cost Sh 2.4 billion.

For a quite some time this year, teacher’s country wide have been eagerly waiting for their mwalimu SACCO dividends for the year 2020. This year, unlike the past years, the dividends have taken abnormally long to be credited into the teachers SACCO accounts, despite some teachers having earned an advance on the dividends. Some malicious sources have rumoured that the delay could be because the SACCO is falling, assertions which cannot be believed since the SACCO is growing daily, and continues to give desired loans to teachers. The main reason for the delay could be due to the effects of covid-19, which have caused rotational attendance at some work places, and mwalimu sacco could not be spared.

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Sources privy to Mwalimu SACCO have revealed that the SACCO is planning to credit the dividends into members’ accounts starting next week. By the end of the week, teachers would have earned their 2020 mwalimu SACCO dividends. Once credited, members will receive an alert from the SACCO, informing them about the amount credited, which will be calculated as a percentage of the total shares the member had as at October 2020. It is not clear how the shares will be calculated this year since the percentage changes year, depending on a number of factors.

So far, quite a number of SACCOS have paid dividends to their members at rates ranging between 8 %- 10 %. Mwalimu SACCO rates also could be between the given ranges. Details about the rates will be shared next week.

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The senate finance committee has opened a probe into the state of spire bank and the risk it poses to the savings of teachers across the country. The committee was determined to save teachers’ huge savings with spire bank, from sinking.

When Mwalimu Sacco bought shares with spire bank, the bank was at the verge of collapsing due to accrued bad loans. At one point, in an effort to restore its image, Mwalimu Sacco wanted to exit spire bank since the bad loans had adversely affected the initially admirable shape of Mwalimu Sacco.

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Mwalimu Sacco is planning to have complete control of Spire Bank upon the exit of one of its partners, businessman Naushad Merali. This is a decision that the Senate finance committee arrived at during a meeting on 1^st December 2020.

Central Bank Governor, Patrick Njoroge, has so far confirmed that Mwalimu Sacco has filed a change in ownership that will see it own all the shares of spire bank limited.

“They will now be owned 100 per cent by Mwalimu Sacco. This will strengthen them in the move towards the new normal. We think that this is a new dawn for this institution,” Njoroge told the Senate Finance Committee.

Need To Inject More Money

With the new move, Mwalimu Sacco will have to pump more money into the bank. Spire bank has been struggling even to lend money to clients and has successively recorded untold loses semi annually. The share holder capital of spire bank has been eroded seriously and all it sincerely needs currently is a strategic investor, who can unsparingly pump the capital it so much needs to run its operations. Mwalimu Sacco should therefore prepare for a very uneasy task ahead, should it take full control of spire bank.

“Spire Bank has a legacy problem, when they were acquired they had very many bad loans, that tag has stayed with it, it’s been limping through the period,” said Njoroge.

The senators expressed their fears that spire bank might collapse any time soon, yet several teachers have involuntarily contributed a share capital of ksh. 20,000 by virtue of being members of Mwalimu Sacco.

Teachers, in all cases, earn through banks and SACCOS. In our country, there are several banks and SACCOS, from which a civil servants can choose a pay point. Choice of pay point depends on a number of factors that are not limited to:

• Earlier payments
• Ease of withdrawal
• Easy accessibility to salary advance at cheaper interest rates.
• Proximity to areas of residence
• Satisfactory services by the staff
• Timely Notifications whenever salary lands on the accounts.

With all those factors in mind and from thorough analysis of various pay points, elimupedia staff sampled five of the best pay points that teachers should try.

1. Equity Bank Limited

Equity bank is usually among the first two pay points to deposit money into members’ accounts. Immediately equity receives payroll from employers, it deposits money into accounts, irrespective of day and time of the week. As early as 22^nd, members of equity bank have always earned and spent their money. This saves them the agony of surviving up to end month.

Equity has the easiest means by which clients can withdraw their cash. Each equity client is entitled to an equitel line that they can use to transfer money to their MPESA accounts. Those without equitel lines can register for mobile banking services and transact from their accounts using USSD code *247#.

Members can also install equity bank app from play store and use it to access their accounts.

Equity bank gives members salary advance at an interest rate of 1.125 per month.

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2. Kenya commercial bank (KCB)

KCB also does quite well when it comes to paying salaries. It does not wait till end month to pay members their dues.

KCB members can also operate their bank accounts any where any time, so long as they have mobile phones and an active MPESA account. Sending money from your KCB account to MPESA is absolutely free.

KCB also offers salary advance at reasonable interest rates.

3. Kenya Women Finance Trust (KWFT)

When it comes to timely payment of salaries, KWFT is always among the first banks to pay salaries. It may not be known widely but the few members associated with it praise it for its better services.

4. Co-Operative Bank

Cop bank is also a good bank when it comes to timely payment of salaries. It has an app that members can use to access their accounts and to check account balances.

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With USSD, *667#, members can withdraw money at any time without spending so much.

5. Mwalimu SACCO

Members of this pay point are mostly teachers. Though Mwalimu SACCO delays to pay teachers salaries, it is among the better pay point options for teachers. The fact that it reminds teachers once money is deposited in their accounts earns it a score.

It has an app and a USSD, though it is among the pay points that charge most expensively for mobile   banking transactions. Mwalimu SACCO charges ksh. 14 to check account balance and ksh. 70 to withdraw any amount less than ksh. 70,000.

Quitting Mwalimu national SACCO is as easy as quitting any abusive contract or relationship. Several reasons can push one to quit Mwalimu National SACCO, the most common one being unreasonable dividends that are overly non proportional to the share total.

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Conditions That Remove One from Mwalimu Sacco Membership Register

• Death
• Old age. Members cease to be members upon attaining 70 years of age
• If declared of unsound mind
• By transferring all shares to another member
• By withdrawing all the share deposits before retirement
• If one becomes bankrupt as declared by the court
• If one is an employee of Mwalimu National SACCO and gets sacked due to Gross misconduct

Upon withdrawal from Mwalimu national SACCO, a member is not allowed to remit any shares to the SACCO, either through direct deposits or cheque off. Members with the Mwalimu national SACCO debts or who have guaranteed other members must offset the debts through direct deposits prior to withdrawal.

Members who successfully quit Mwalimu national SACCO must be paid their dividends for the particular period, and any savings in their accounts, whether fixed or withdrawable.

Overtime, savers get dissatisfied with the general operations of Mwalimu national SACCO. Under these circumstances, they do have only an option left: to quit.

Conditions For Quitting Before Retirement

To quit the SACCO before retirement or death;

• You must ensure that you have cleared all the pending loans that you borrowed from Mwalimu national SACCO.
• You must also ensure that you not guaranteed any member by the time you are quitting. To achieve this, you must control how you guarantee other members and start avoiding signing forms as a guarantor, at least 6 years before quitting. In case some of the loanees you have guaranteed are still servicing their loans, then you must arrange for guarantors that can substitute you.

Once the teacher meets the two conditions above, he / she should take the following steps;

• Write to the board of directors of Mwalimu national SACCO, informing them of your plans to quit membership. This should be done three months prior to the date of quitting as indicated in the letter.
• Get a clearance certificate from the Teachers Service Commission, TSC.
• Submit the letter, clearance certificate and your national ID to the SACCO.
• Wait for the withdrawal request to be processed. This takes a few days.