Why UK lender walked away from Spire Bank deal : The Standard

UK crypto lender, BlockBank has walked out of a deal to buy Mwalimu Sacco’s Spire Bank. BlockBank had approached the teachers’ bank last year, but failed to prove it had the money to seal the deal, according to Spire’s management. “They had expressed interest to partner at the equity level. They were given conditions, including proof of funds which they could not show,” said Spire Bank Acting Managing Director Dr Norman Ambunya said yesterday. “They visited a number of banks and we were part of the banks they talked to,” he added. BlockBank had touted the deal as the first step into supplying secured and affordable financing options for emerging economies. It sought to alter the focus of the bank to commercial banking services, governments, businesses and cryptocurrency companies. Mwalimu Sacco bought Equatorial Commercial Bank from businessman Naushad Merali and rebranded to Spire Bank which has come to be viewed as a bad deal following concerns around the level of due diligence undertaken by the teachers’ union. Spire Bank has sunk into losses that have eaten into its core capital, forcing its new owners to pump in more money in a bid to meet statutory minimum requirements. The bank has inadequate capital and needs to raise more funds from shareholders to comply with the regulatory requirement of Sh1 billion minimum core capital. “Spire Bank’s continued bleeding of money has wiped out its core capital ratio to -15.95 per cent (-14.08 per cent adjusted for IFRS (International Financial Reporting Standards) 9 impairment charge) as at 3Q18 against the statutory minimum of 10.5 per cent,” said Standard Investment Bank in an investor update. Getting money from strategic partners has become a necessity for Kenya’s small lenders who are struggling to keep afloat.

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BlockBankMwalimu SaccoUK crypto lender