By Malachi Motano
Spire Bank, wholly owned by Mwalimu National Sacco, now faces a crucial quest for new capital because its losses have seen it breach all the minimum capital adequacy ratios by large margins.
The bank continues to make bigger losses, that swept away its capital in the 2020 financial, leaving it with a deeper negative asset base of Sh1.8billion and put Sh4.79 billion customer deposits at risk.
The Sacco bought majority shares in the institution in 2015, when the lender was known as Equatorial Commercial Bank.
The Bank’s core capital stands at negative Sh2.63 billion against the a rule that all banks must maintain a statutory minimum of Sh1 billion as core capital.—meaning it requires Sh3.6 billion to comply with the requirements of a lender.
It accumulated losses of up to Sh8.4 billion over the years and has wiped out shareholder funds which now stand at negative Sh1.8 billion.
“The statement of financial position and statement of comprehensive income are extracts from the bank’s financial statements,” acting Managing Director Brian Kilonzo.
The bank sunk into a Sh1.2 billion loss for the year ended December 2020 from a Sh472 million loss in 2019, and is no longer lending with negative capital position as loans issued shrunk from Sh3.3 billion in 2019 to Sh2.5 billion at the end of last year.
It only made Sh346 million interest income from the government and customer loans and made a Sh54 million loss from non-interest incomes because of foreign exchange positions it took.
The bank’s value of defaulted loans rose to Sh2.7 billion—which is more than its total loan book.
