Struggling Metropolitan National Sacco closes branches
Metropolitan National Sacco has begun cost cutting measures with branch closures.
The Sacco which has been saddled with high Non-performing loans (NPLs) is struggling much to the extent of suspending long-term loans to its members, seeking loan repayment suspension from creditors and suspending withdrawals.
In April 2022, the government ordered probe into the Sacco.
In a gazette Notice No 4558 dated April 22, 2022 the Commissioner for Co-operative Development David Obonyo has directed a probe into the by-laws, working and financial conditions, management, and the conduct of both present and past directors of the Metropolitan Sacco.
Metropolitan Sacco came under scrutiny following increased member complaints on a wide range of issues, including refusal to refund entire share capital after a member exits the Sacco, lengthy loan approval process, non-functional mobile banking services and withholding of 50 percent of member dividends.
The Sacco abolished dividend payment for the year 2021, according to the notice of the annual general meeting (AGM) dated March 25, 2022, in which the dividend proposal failed to feature on the agenda.
The Sacco began sliding into financial trouble in 2019 following a surge in bad loans that squeezed its liquidity and ability to meet member withdrawals.
The Sacco, which has a membership of about 75,000 of which majority are teachers, issued gross loans amounting to Ksh16.7 billion ($145.21 million) against a total income of Ksh1.99 billion ($17.3 million) in the year 2020, according to the Sacco Supervision Annual Report (2020).
Its total assets and deposits stood at Ksh16.73 billion ($145.47 million) and Ksh7.64 billion ($66.43 million), respectively, in the same period.
In July 2019, Co-operative Bank took over a consultancy role in the Sacco promising to support it by ensuring it has adequate working capital for adequate service delivery to its members.
The lender, which thrives on a unique banking model based on the Co-operative movement, also offered to provide advisory services through its subsidiary, Co-op Consultancy, to build capacity for the Sacco’s long-term sustainability.
The bank also promised to restructure the Sacco’s funding requirements to better manage the members’ monthly loan demands as well as the overall liquidity flows.