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The Central Bank of Kenya has announced that Equity Bank Kenya Limited (EBKL) will officially acquire the assets and liabilities of Spire Bank Limited, effective January 31.
The approval came from the CBK on January 23 and the Cabinet Secretary for the National Treasury and Planning Prof Njuguna Ndung'u on January 24.
This acquisition will boost the stability of Kenya's banking sector, as announced by the Central Bank.
EBKL is a subsidiary of Equity Group Holdings Plc and was first registered as Equity Building Society in 1984.
The bank converted to a commercial bank in December 2004 and was listed on the Nairobi Securities Exchange in 2006.
As of December 31, 2022, EBKL ranked 2nd out of 39 banks in terms of market share with 12.5% and 191 branches across the country.
On the other hand, Spire Bank, formerly known as Equatorial Commercial Bank Limited, started operations in 1984 as a non-bank financial institution.
It converted to a commercial bank in 1995 and changed its name to Spire Bank in 2016. As of December 31, 2022, Spire Bank ranked 39th out of 39 banks in terms of market share with only 0.01% and 12 branches nationwide.
READ: MPs reject Spire Bank's request for a Sh2 billion loan from CBK
Why Spire Bank will pay Equity Bank Sh510 million
The CBK-supported transaction is structured as an asset purchase, with Equity taking over the assets and liabilities of Spire Bank, rather than injecting capital into the acquisition.
Equity will be compensated Sh510 million for the difference between the assets and liabilities, resulting in Spire Bank being valued at zero.
“On an annual basis, the bank makes losses of approximately Sh1.1 billion. Its entire capital would be wiped out within the next two years hence a more painful loss should the liquidation process stall,” Mwalimu Sacco CEO Kenneth Odhiambo told Business Daily.