CBK Governor Endorses Spire Bank Take Over

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The Central Bank of Kenya (CBK) Governor, Dr. Patrick Njoroge, has proposed the acquisition of Spire Bank.

Speaking when he appeared before the Departmental Committee on Finance and National Planning in the National Assembly, Governor Njoroge noted that the Central Bank had endorsed the deal in the interest of saving the members' deposits and safeguarding the interests of the bank's manpower. He explained that should the acquisition have happened a few months ago; they would have saved Mwalimu Sacco more than Ksh300 million (US$2.4 million).

The Governor lamented that due to accumulated losses posted over the years, the bank's core capital has been eroded from a high of Ksh1.57 billion (US$128 million) in 2016 to a negative of Ksh1 billion (US$8.1 million).

He warned against maintaining the status quo on Spire Bank, adding that the CBK continues to urge for a quick conclusion of the acquisition process.

The Committee heard that delay in the approval of the deal had resulted in the bank losing over Ksh100 Million ($815000) per month, reduced the bank's assets, and increased the levels of non-performing loans (NPLs). These further resulted in insufficient capital and a lack of liquidity buffers for resilience, coupled with a high senior management turnover.

The committee also met with the leadership of Sacco Societies Regulatory Authority (SASRA) led by Mr. Peter Njuguna, The Chief Executive Officer; Mr. Jeremiah Were, Manager, SACCO Supervision and Mr. Peter Owira, Director, Compliance, Market Conduct & Regional Coordination to shade more light over the same issue.

At the same time, Governor Njoroge told the committee that the CBK is working towards improving the credit standing of mobile phone digital loan borrowers whose loans are non-performing and have already been reported to credit reference bureaus (CRBs).

He noted the bank had adopted this strategy to improve the Credit Repair framework. According to statistics by the Central Bank of Kenya, over 4.2 Million mobile phone digital borrowers listed with CRBs need a repair of their credit standing.

He told the committee that the status of the borrowers will be updated from non-performing loans through a provision of a 50 percent discount of the outstanding loan amount, with a six-month maximum period to repay the balance.

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