On September 12, 2022, Equity Bank Kenya announced that it had signed an Assets and Liabilities Purchase Agreement with Spire Bank for the purchase of certain assets and liabilities of the teachers’ bank.
With the signing, Equity Bank Kenya, a subsidiary of Equity Group Holdings, effectively acquired 20,000 depositors in a day.
Spire Bank reported total customer deposit liabilities of US$16 million and net loans and advances to customers of US$14 million in its unaudited half-year financial report as of June 2022. This was along with additional statutory loan loss reserves of US$6.6 million, which reduced the net loan and advances after applying statutory loan loss provisions of Kshs. 945 million.
Equity Bank Kenya Limited acquired approximately 20,000 deposit customers with deposits totalling US$1.09 million, representing approximately 0.25 per cent of EBKL’s customer deposits of US$4.3 billion and approximately 0.14 per cent of Equity Group’s consolidated customer deposits of US$8 billion, as reported in their unaudited half-year financial statements as of 30 June 2022.
At the same time, Equity Bank Kenya acquired approximately 3,700 loan customers with outstanding loan balances reported at a net carrying value after statutory loan loss provisions of US$7.8 million by Spire Bank in its unaudited half-year financial statements as of 30 June 2022, representing approximately 0.23 per cent of EBKL’s reported net loans and advances to customers of US$3.4 billion and approximately 0.15 per cent of Equity Group’s reported net loans and advances to customers of US$5.3 billion.
At the partnership signing ceremony, Group Managing Director and CEO of Equity Group, Dr. James Mwangi stated, “We feel honoured to extend a hand of partnership to teachers with whom we have had a long and strong relationship.”
He added that with the 20,000 teachers they were inheriting from Spire Bank, Equity would become home to over 100,000 teachers spread across the country. The member teachers would be accessing banking services through the Equity Bank Kenya branches, agent network, and digital banking channels.
Equity currently handles a total monthly remittance of US$14.8 million in teacher salaries.
43,000 teachers borrowed loans totalling US$272 million, with monthly repayments totalling US$6.6 million.
Equity Bank Kenya, which is the country’s largest bank by assets as of 2021, is home to over 24,000 ECDE and primary schools and over 4,000 secondary schools.
The asset value of the institution was estimated at around US$10 billion. Kenya Commercial Bank (KCB) came next, with assets worth approximately US$9 billion. Both institutions had the highest level of tier 1 capital in the country.
“We appreciate the teachers’ commitment to our partnership in shaping future generations through Equity Bank Kenya’s Wings to Fly programme, where they continue to serve as mentors and champions to over 47,000 secondary school scholars with an annual completion rate averaging 97 per cent, 82 per cent attaining university entry grades, and 86 per cent taking on leadership roles,” Dr. Mwangi said.
He said this partnership was an opportunity to strengthen the bank’s relationship with the teaching community by ensuring that they continue to have access to banking services.
Dr. Mwangi said Equity Bank Kenya would work with Mwalimu Sacco to achieve its Front Office Services Activities (FOSA) dreams by offering tailor-made products and services, making Equity the teachers’ bank of choice.
The transaction meant that Spire Bank’s deposit and loan customers would enjoy uninterrupted access to Equity Bank Kenya’s banking services.
After signing the agreement, Spire Bank Board Chairman William Rahedi said that the completion of the transaction would ensure that deposit and loan customers continued enjoying uninterrupted access to banking services through Equity Bank.
Mwalimu National Sacco Chairman Joel Gachari said that once the proposed transaction is completed on November 30, 2022, all Spire Bank depositors will become Equity Bank Kenya’s customers.