The government is to announce a GHS2 billion bailout package for some six indigenous banks to enable them to meet the Bank of Ghana’s 31 December 2018 deadline for recapitalisation.
The package, according to Graphic.com.gh, was hurriedly put together this month for the six banks, which are seen as well-governed, solvent but unable to meet the BoG’s GHS400 million new minimum capital for banks on their own.
It is now seen as the only glimpse of hope for the six banks, who risk having their licences withdrawn, or, at best, downgraded to savings and loans companies for failing to successfully recapitalise since September 2017 when the directive was issued.
The state-owned website said one source confirmed that the GHS2 billion is to be sourced by a special purpose vehicle (SPV), the Ghana Amalgamated Trust Limited (GAT), which the government incorporated on December 17 to execute the transaction.
The SPV is to mobilise the funds through the issuance of a bond that will be sold to both domestic and foreign investors, one of the sources involved in the structuring of the last-minute bailout package is reported as having divulged.
The bond will be partially guaranteed by the government to make it “sweeter and comfortable” to investors to participate.
Although the modalities of the deal are still being fine-tuned, the website said it is further informed that the central bank has since given its blessing to the arrangement, making it possible for the beneficiary banks to be classified as recapitalised.
Another source said it foresaw the number of beneficiary banks increasing to about eight as more indigenous banks come forward for the support.
In November this year, the Second Deputy Governor of the Bank of Ghana, Elsie Awadzi revealed at a Finance forum in Accra that at least 20 out of the 30 existing universal banks in Ghana had met the GHS400 million Minimum Capital Requirement of the Bank of Ghana.
“Over 20 banks have met [the minimum capital requirement] or are already there and we have 30 banks, so, the rest, we are meeting them on a daily basis to say: ‘Tell [us] where you are on your capital raising plans’.
“We are confident that they are going to meet [it] but if for some reason they cannot meet and will not merge, well, then that is another matter altogether, but we cannot allow banks that are not well-capitalised to remain in the system after 1 January”.
Since August 2017, seven local banks have gone under.
Two of them, UT Bank and Capital Bank, were swallowed by the state-owned GCB Bank. The five others, uniBank, Sovereign Bank, The Royal Bank, The Beige Bank and The Construction Bank, were fused together to form the all-new state-owned Consolidated Bank Ghana Limited (CBG).
Credit: Daily Graphic