Kenya’s co-operative bank has agreed to bail out one of the country’s largest credit unions – which has been having liquidity issues in recent months.
The savings and credit co-operative Metropolitan Sacco was facing difficulties due to non-performing loans amounting to KES1.2bn (£9.3m).
The credit union runs eight branches across the country and has a membership of 100,000 and assets of KES13.6bn (£105m). With the bank’s support, the credit union has been able to re-launch its debit card, personal cheques and trade finance partnerships.
The sacco (savings and credit co-op) is currently focusing on recovering the outstanding loans and lending these recovered funds to members.
The bank says it is coming to the rescue due to its commitment to the co-operative movement.
As part of the deal, the sacco agreed a corporate restructuring programme starting this month to better manage its members’ monthly loan demands and the overall liquidity flows. The bank will also be providing advisory services to the credit union through its subsidiary Co-op Consultancy, with the aim of building capacity for long-term sustainability.
After the restructuring agreement was signed, sacco chair Christopher Karanja said: “We thank the Co-operative Bank for coming to our great support at such a critical moment.
“The recommendations and measures that have so far been put in place will certainly get the sacco to new heights. The corporate restructure by the bank is the best thing that has happened to the sacco in a long time. We will now boldly and seamlessly offer services to our members.”
Tthe director of the Co-operatives Banking Division at the bank, Vincent Marangu, said that the bank has a strategic interest in the turnaround and long-term growth of Metropolitan National Sacco, a key stakeholder in the co-operative movement.
Mr Marangu added that the corporate restructuring deal would ensure the sacco has adequate working capital to support the members as well as improve the operational efficiency of the Sacco.
“We have done it before for a number of co-operatives, with huge success, and therefore this will be in line with our mandate and commitment to the co-operative movement,” he said.