The National Assembly Committee on Finance and National Planning, has rejected Spire Bank’s CBK loan bid.
The bid was a push by teachers for a Sh.2 billion State loan, in their efforts to save the troubled lender from collapse.
The teachers argue that the banking regulator had in the past given financial support to distressed lenders, even as they own the bank through their savings and credit union, Mwalimu National Sacco.
Latest developments have seen the withdrawal of the Sacco Societies Regulatory Authority, from pumping additional money into the bank.
Spire’s asset base dropped to Sh4.5 billion as at June last year from Sh13.8 billion in June 2016, while deposits dropped to Sh5.2 billion from Sh8.1 billion in a similar period.
Mr Merali withdrew Sh1.7 billion from Spire days after selling the lender to Mwalimu, prompting investor fears that saw other customers withdraw their cash.
Mwalimu’s acquisition will also be scrutinised for any foul play after the parliamentary committee directed the Ethics and Anti-Corruption Commission and the Directorate of Criminal Investigations to investigate the deal.
The bank’s core capital has since been eroded to negative Sh3.1 billion from Sh1.57 billion, highlighting the dire state of the lender that teachers have been struggling to sell.