The government has abandoned it plans to merge ADB and NIB into the proposed National Development Bank.
The move is intended to pave the way for each of the banks to recapitalize and revamp its operations.
The Daily Graphic is reliably informed that the merger was cancelled in October at the behest of President Akufo-Addo.
The President is said to have expressed the gov’ts commitment to resource the two banks individually to enable them to play their traditional roles of stimulating investment in the manufacturing sector and transforming agriculture and agro-processing through strategic lending.
The gesture is in line with the governments agenda of economic transformation through industrialization and increased investment in agriculture and agro-processing
Consequently, Daily Graphic has learnt that the government, through the Ministry of Finance, will formally announce the cancellation of the merger in the coming days to pave the way for the banks to use their different method to bolster their respective stated capital to the GHS400M by December 31.
In an interview with the Daily Graphic on December 8, the Managing Director of ADB, Dr John Kofi Mensah, confirmed the cancellation of the merger but said discussions were ongoing on how to recapitalize the bank.
“it is sure that we will meet our capital requirement before the deadline ends,” he said
The capital raising exercises are need to ensure that the two banks which are largely owned by the state, meet the Bank of Ghana new minimum requirement of GHS400 m before the year ends.
According to the financial statement of the two banks, ADB and NIB have GHS 275.1 M and GHS70M respectively as stated capital.
This means that the government and the Bank of Ghana will need almost GHS500 million to recapitalize the two banks to the new level of GHS400 million.
More than 92 percent of the ADB, which is listed in the Ghana Stock Exchange (GSE), is owned by the government and the BoG through its subsidiary, the Financial Investment Trust Limited (FIT), leaving the remainder for retail investors and staff of the bank.
The ADB’s two major shareholders are now in discussions on how to plug the capital deficit. Dr Mensah, however did not mention the exact amount involved nor the method should be used to raise the money except to say the process would involve the minority shareholders.
When asked if the bank will consider a right issue – the sale of shares on discount to existing shareholders- Dr Mensah said “I think the major shareholders have decided to put in their money. However, we will need the consent of the small shareholders and that is what we are working on”
A source close to the bank’s capital raising exercise told the Daily Graphic told the Daily Graphic that the BoG and the government were looking at raising between GHS150M and GHS200M for the bank.
The amount took into account ongoing discussion aimed at cleaning the bank’s loan book, which could lead to the write-off of some bad assets, it said.
Like the ADB, the government owns about 95 percent of NIB, leaving the rest for individual investors.
Although the management of NIB did not respond to requests for comment, the Daily Graphic is reliably informed that a similar financial package is being worked out for the bank to meet the BoG’s new capital requirement before the deadline elapses.
Until recently the ADB had gone through some boardroom wrangling that were settled this year when the bog annulled the share purchased of four institutional investors.
The action by the Central bank reverted the stakes of the four investors, totaling 51 percent, to FIT a subsidiary of the BoG.
Credit: Daily Graphic