This archive report was first published on 5 August 2019.
Spire Bank, a financial institution controlled by Mwalimu National Sacco, is facing a boardroom war that may lead to its downfall. The war is between a section of the board members appointed to cater for the interests of the controlling party and those sympathetic to the teachers' cause.
At the centre of the war is businessman Naushad Merali, who holds a 25pc stake at the bank. Merali is now plotting a coup against the institution, whose remaining 75pc stake is held by the financially troubled Mwalimu National Sacco.
Spire Bank's troubles began in 2015 when Mwalimu National Sacco acquired a majority stake in Equatorial Commercial Bank, in which Merali had a controlling interest. After the acquisition, the bank was rebranded into Spire Bank.
Recently, Spire Bank senior managers were summoned by the Central Bank of Kenya governor Patrick Njoroge to shed light on the financial status at the institution. CBK sought to know the status of the bank as well as its liquidity ratio so as to advise on the next course of action.
Those summoned included Norman Ambunya, then managing director. Ambunya was appointed as the managing director in 2015. He was previously the head of finance, administration and treasury at the bank.
However, when the CBK governor sought clarification on why the bank was going down, Ambunya was unable to provide a satisfactory response, prompting the governor to walk out of the meeting in protest.
After the meeting, Ambunya tendered his resignation as managing director, citing frustrations from a section of the board. But a week after his resignation, a section of the board prevailed upon him to rescind the decision.
However, CBK refused to allow him back, stating that its guidelines provide that once a CEO has unceremoniously left the institution, he cannot be allowed back.
Since 2015, Mwalimu National Sacco has soaked in losses of more than Sh2 billion following the acquisition of a majority stake in Equatorial Commercial Bank, now Spire Bank. The Sacco, owned by teachers, invested a total of Sh2.4 billion to take a 75pc stake in the lender, which later rebranded to Spire Bank.
The bank has remained in losses that have whittled down its book value to Sh551.6 million as of September 2017, placing the worth of Mwalimu's stake at a mere Sh413.7 million.
Questions are now being asked as to whether Merali is working on the bank's downfall to re-buy the bank at a song.
