[Kenya] Equity Bank set to acquire Spire Bank
Equity Bank (Kenya) Ltd, a subsidiary of Equity Group Holdings has signed an Assets and Liabilities Purchase Agreement with Spire Bank Limited for the purchase of certain assets and liabilities of Spire Bank Limited.
This Transaction is anchored in Equity’s Plan to support the recovery of the economy post covid. In its un-audited half year financial report as at June 2022, Spire Bank reported total customer deposits liabilities of Kshs. 1,938 million and net loans and advances to customers of Kshs.1, 745 million together with additional statutory loan loss reserves of Kshs. 800 million that reduce the net loan and advances after applying statutory loan loss provisions of Kshs. 945 million.
In this transaction, Equity Bank Kenya Limited is acquiring approximately 20,000 deposit customers holding deposits of approximately KES 1,322 million which represents approximately 0.25% of EBKL’s customer deposits of KES 522,753 million and approximately 0.14% of Equity Group’s consolidated customer deposits of KES 970,943 million, as reported in their un-audited half year financial statements as at 30 June 2022.
Similarly, Equity Bank Kenya is likely to acquire approximately 3,700 loan customers that have outstanding loan balances reported at a net carrying value after statutory loan loss provisions of KES 945 million by Spire Bank in its un-audited half year financial statements as at 30 June 2022 which represents approximately 0.23% of EBKL’s reported net loans and advances to customers of KES 417,482 million and approximately 0.15% of Equity Group’s reported consolidated net loans and advances to customers KES 650,556 million as at 30 June 2022.
Speaking when announcing Equity Group’s decision at the partnership signing ceremony, Dr. James Mwangi, Group Managing Director and CEO said, “We feel honoured to extend a hand of partnership to teachers with whom we have had a long and strong relationship. With the 20,000 teachers who we will be inheriting from Spire bank, Equity will become home to over 100,000 teachers spread throughout the country and accessing our services through our branches, our agent network and digital banking channels. Currently Equity processes a total monthly remittance of Kshs 1.8 billion in teachers’ salaries. 43,000 teachers have borrowed loans valued at Kshs 33 billion with a monthly repayment of Kshs.800 million. In addition, Equity is home to over 24,000 ECDE institutions and primary schools, and over 4,000 secondary schools.”
Dr. Mwangi continued, “We appreciate the commitment that the teachers have shown to our partnership in moulding the future generations through our Wings to Fly program where they continue to serve as mentors and champions to over 47,000 secondary school scholars with an annual completion rate averaging 97% with 82% attaining university entry grades and 86% taking up leadership roles.
We take this partnership as our gesture of gratitude and an opportunity to deepen our relationship with the teaching fraternity by ensuring that they continue to enjoy uninterrupted access to banking services. We commit to work with Mwalimu Sacco to achieve their dreams of a Front Office Services Activities (FOSA) by offering tailor made products, services and relationship that will make Equity the teachers’ bank of choice and a platform for shared prosperity.
Dr. Mwangi added, “The proposed transaction will mean that Spire Bank's deposit and loan customers will enjoy uninterrupted access to banking services. By delivering this, Equity Bank Kenya is taking a thought leadership role in enhancing the stability of the Kenyan banking sector. This transaction is in line with our vision of championing the socio-economic prosperity of the people of Africa,” concluded Dr Mwangi Speaking after signing the agreement, Spire Bank Board Chairman, William Rahedi said, “We are pleased to have reached this agreement which on completion will ensure that our esteemed deposit and loan customers will continue to enjoy uninterrupted access to banking services through Equity Bank Kenya Ltd. In view of Spire Bank’s current market position, the board of directors is of the view that this development is in the best interest of Spire Bank’s customers and shareholders.
The Chairman of Mwalimu National Sacco, Joel Gachari said, “On completion of the proposed transaction on 30th November 2022, all existing depositors of Spire Bank (other than remaining deposits from Mwalimu National Sacco) will become customers of Equity Bank Kenya and enjoy a wide range of products and services through Equity’s extensive infrastructure and channels including branches, agent network and digital self-service channels. We shall also explore other areas of collaboration for the benefit of both institutions and their members.