Mwalimu Sacco is set to unveil its new bank tomorrow morning following its acquisition of Equatorial Commercial Bank (ECB).
The sacco had acquired the bank previously owned by billionaire Naushad Merali in a deal that was estimated to be worth Sh. 2.6 billion.
Mwalimu Sacco will become the first Kenyan sacco to buyout a fully-fledged commercial bank. The unveiling of the newly branded bank comes at a time when the local banking sector has been facing headwinds.
The buyout has been long coming, having kicked off early in 2014 when members of the sacco passed a resolution to acquire the bank.
In January 2015, Mwalimu announced that it had acquired a 51 per cent stake in ECB. By the end of 2015, Mwalimu Sacco finalized the acquisition of a 75 per cent stake in the bank at a cost of Sh. 1 billion. In December last year, ECB raised Sh. 500 million in a fully-subscribed rights issue, with Mwalimu Sacco pumping in Sh. 375 million.
The sacco is currently the largest sacco by assets valued at Sh28.6 billion in the country. It has a membership of over 60,961 and savings of Sh18.3 billion. It was formed and registered in the year 1974 under the Co-operative Societies Act as a Sacco Society. Its main objective is to mobilize savings and provide credit to its members.
In the nine months to September 2015, ECB posted a net loss of Sh61.8 million, reversing a net profit of Sh49 million a year earlier. The bank’s total capital to total risk-weighted assets stood at 15.21 per cent as at September 2015.
In the full year ended December 2015, the third tier bank posted a net loss of Sh486 million in the year ended December compared to Sh326 million a year earlier. Mwalimu Sacco will be looking to return the bank to profitability.