Spire bank is majorly owned by Mwalimu National Sacco (75%) and Sameer Group (25 %.) The former Equitorial Bank, owned by Naushad Meralli was purchased by Mwalimu Sacco in a scheme meant to defraud teachers through Ex-CEO Robert Shibutse who has been a Meralli staff and mole. The shell Bank was purchased at kes 2.4Billion even after concerns were raised over lack of proper due diligence and conflict of interest. The bank has never made a profit since the purchase in 2004 and has been eating on the capital now standing at over negative one billion (kes 1 billion) against the statutory requirement of kes 1 Billion. The cumulative losses since the acquisition stands at kes 3.2 Billion and has flouted all the minimum regulatory capital requirements.
Despite the above historical schemes to defraud hard working teachers and depositors, the current leadership led by a moribund board that lacks expertise in financial and business matters, a hapless and puppet Managing Director ( Norman Ambunya)who operates like an accounting clerk of the bank with miserable leadership qualities and a General Manager (Onesmus Muia) who is the defacto deputy to the MD whose mental stability is questionable and his role in the bank is to openly harass and abuse staff possibly over compensating on a recent prostate surgery that went south. In open disregard to the mismanagement of the bank, the defiantly increased their salaries and in January 2019.
There are sharp differences between the two Shareholders of the Bank with Meralli, who holds 25% of the bank de-banking from his own bank. All Sameer group of companies closed their accounts in the bank withdrawing more that kes 5Billion in deposits and absconded all board meetings leaving Spire bank with a huge liquidity gap below the statutory minimum requirements of CBK.
Sacco Model fraud
The bank has been hoodwinking CBK, board and the clients that they are implimenting a Sacco model ( a copy will be shared) that will take 90% business from Co-operative Bank and catapult it to a 1st tier bank in 2 years. The impossibility of the strategy is mind boggling given the bank’s inexperienced and corrupt management, miserable liquidity position (around 0% as at 18th April), lack of skilled staff fuelled by naked nepotism and archaic technology where the bank doesn’t even have an internet banking platform.
How the rot is perpetuated;
Nepotism. A substantial number of employees are the sons and daughters of the Directors and senior management. A case in point is the MD who has his brother working at the bank’s Eldoret Branch, The GM who has his entire family infiltrating the bank, one of the Directors Mr. Benson Milai who has a daughter and son working for Chester Branch and Upperhill branch respectively.
The management colluding with rogue clients to defraud the bank through suspicious transactions. Case in point is where the management transacts business with the said rogue clients. The MD recently purchased a red Landcruiser V8 from a client namely Mapana Traders Ltd who have a non performing loan of kes 75million which is unsecured. The same client is a regular visitor at the bank despite the status of his facility.
The bank has a 51% non performing book. This is inaccurate since there are major overdraft facilities that are renewed irregularly and other term facilities restructured to over 10 years to give an impression of performance to the unsuspecting eye. The securities and client files are conveniently manually handled hence creating horrible loopholes where client files go missing and some securities such as car log books and land titles mysteriously disappear.
The Management (MD &GM) have been arm twisting suppliers for kickbacks on services offered to the Bank. An example is Insurance business from Mwalimu Sacco and the bank which is channeled through the Banks brokerage arm.
Currently, the bank has been experiencing a run where clients are withdrawing deposits in droves. As at 18th April the liquidity was at 0.2% against a statutory requirement of minimum 20%. This has led to a queue of unpaid transfers with illiquid shareholder Mwalimu National unable to refinance the Bank.
CBK should intervene before another financial disaster hits our already fragile banking sector.
More to follow.