The Equity Group Holdings subsidiary Equity Bank (Kenya) Ltd has entered into an Assets and Liabilities Purchase Agreement with Spire Bank Limited to acquire certain assets and liabilities from Spire Bank Limited.
Equity’s Strategy for promoting economic recovery post-covid forms the basis for this Transaction. The entirety of customer deposits were reported as liabilities of Kshs in Spire Bank’s unaudited half-year financial report as of June 2022. Additional statutory loan loss reserves of Kshs. 1,938 million and Net Loans and Advances to Customers of Kshs.1,745 Million When loan loss provisions are required by law of Kshs. 800 million are applied, the remaining loan balance and advances are reduced by that amount. There are 945,000,000 of them.
About 20,000 deposit customers with a total of about KES 1,322 million are being acquired by Equity Bank Kenya Limited in this deal. This is equivalent to about 0.25 percent of EBKL’s customer deposits of KES 522,753 million and about 0.14 percent of Equity Group’s consolidated customer deposits of KES 970,943 million, as reported in their unaudited half year financial statements as of 30 June 2022.
Similarly, Equity Bank Kenya is expected to acquire roughly 3,700 loan customers with outstanding loan balances reported at a net carrying value after statutory loan loss provisions of KES 945 million by Spire Bank in its unaudited half year financial statements as of 30 June 2022. This amounts to roughly 0.23 percent of EBKL’s reported net loans and advances to customers of KES 417,482 million and roughly 0.15 percent of Equity Group’s reported consolidated net loans and advances of KES 1.1 trillion
Group Managing Director and CEO Dr. James Mwangi stated at the partnership signing ceremony, “We feel honoured to extend a hand of partnership to teachers with whom we have a long and strong relationship.” With the 20,000 teachers coming over from Spire Bank, Equity will have over 100,000 teachers as customers. They can use our branches, agents, and digital banking channels to access our services anywhere in the country. Currently, Kshs 1.8 billion (approximately $200,000) is sent out each month to pay teachers through Equity. There are currently 43,000 teacher loans totaling Kshs 33 billion, with Kshs.800 million being repaid each month. More than 4,000 secondary schools and 24,000 early childhood and primary education facilities call Equity home.
Dr. Mwangi continued, “We appreciate the dedication that the educators have shown to our partnership in molding 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%, 82% attaining university entry grades, and 86% taking up leadership roles.
With this collaboration, we hope to show our appreciation for the hardworking educators in our community while also strengthening our ties to the academic community as a whole by guaranteeing that they will always have easy access to banking services. In order to help Mwalimu Sacco realize its vision of a Front Office Services Activities (FOSA), we have pledged to provide them with the products, services, and relationships they need to become the bank of choice among educators and a platform for mutual economic growth.
Dr. Mwangi elaborated, saying, “The proposed transaction will mean that Spire Bank’s deposit and loan customers will enjoy uninterrupted access to banking services. Equity Bank Kenya is showing leadership by setting an example in this area, which will help the financial system in Kenya to be more secure. Following the signing of the agreement, William Rahedi, Chairman of Spire Bank, said, “We are pleased to have reached this agreement which, upon completion, will ensure that our esteemed deposit and loan customers will continue to enjoy uninterrupted access to banking services through Equity Bank Kenya Ltd. The board of directors at Spire Bank believes this move is in the best interest of the bank’s customers and shareholders are given the company’s current market position.
On the 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. For the betterment of both organizations and their constituents, we will also investigate additional avenues for working together.