The Minority in Parliament has proffered solutions to government on how to handle the National Investment Bank (NIB) in order to stop attempts aimed at selling it to ADB Bank Ghana Limited.
Minority Spokesperson on Finance, Isaac Adongo says the move to have ADB Bank takeover NIB smacks of conflict of interest since the Bank of Ghana (BoG) is said to own majority stake in ADB.
“The law requires that if the Bank of Ghana is not satisfied with NIB, it has several options including placing NIB under administration like they placed uniBank under administration, revoke the licence of NIB because that is their property,” he told journalists in Accra on Thursday, September 28.
“But in revoking the licence, they must take steps to ensure that depositors’ funds are protected by placing it under receivership and proper supervision to close the phase of life.”
The Bolgatanga Central Member of Parliament (MP), however, observed that government has no intentions of taking a regulatory action on the state of NIB.
“They are not intending to place NIB under Article 930 but they are trying to find a back-door approach without regard to the law that set up NIB.”
He said the solution to the current crisis of NIB is to restructure its finances to balance its sheets and “swap all the NIB debts that it owes to government”.
Mr Adongo, therefore, served notice that they will kick against any move to offset assets of NIB to ADB.
The former Ranking Member on the Finance Committee of Parliament Dr Cassiel Ato Forson and current Minority Leader, who also spoke at the presser, said the Minority will document its recommendations to the government’s Economic Management Team as well as the Governor of the Bank of Ghana “telling them we are ready to fix this situation because Ghana is for all of us”.
Earlier this month, there were media reports of Government considering the takeover of the National Investment Bank (NIB) by ADB Bank.
The reports indicated that the decision is part of measures being considered to help revamp the NIB, which has in the last few years been through financial challenges.
According to the reports, Government came to this decision because it is unable to continue advancing financial support to NIB.
Currently, the Government is experiencing financial difficulties which has necessitated the application for a $3 billion bailout from the International Monetary Fund to revive the economy.
According to some financial analysts, the ADB Bank itself would require financial support to put it in a better stead for the takeover, owing to the precarious financial position of NIB. They contend that it is better to sell NIB.
There are other industry players who are not in favour of the takeover. They argued that efforts by Management of NIB to salvage the bank from collapse have started bearing fruits.
They explained that the bank has taken measures to block revenue leakages and in a position to fully recover with an injection of ¢2.2 billion capital into its operations.
Indications are that the Government of Ghana owns more than 50% shares in NIB. Financial Trust Fund held by the Bank of Ghana is also said to have a little over 44% stake. The remaining shares are held by some private investors.
NIB is Ghana’s first development bank. It was established in 1963 to promote rapid industrialisation in all sectors of the Ghanaian economy.
Meanwhile, information available on the Website of ADB Bank has it that the government has abandoned its plans to merge the two banks into the proposed National Development Bank (NDB).
The report, which cited the Daily Graphic, says “The move is intended to pave the way for each of the banks to recapitalise and revamp its operations.”
Please read report below:
According to the Daily Graphic it is reliably informed that the merger was cancelled in October at the behest of President Nana Addo Dankwa Akufo-Addo.
The President is said to have expressed the government’s commitment to resource the two banks individually to enable them to play their traditional roles of stimulating investments in the manufacturing sector and transforming agriculture and agro-processing through strategic lending.
The gesture is in line with the government’s agenda of economic transformation through industrialisation and increased investments in agriculture and agro-processing .
Consequently, the 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 different methods to bolster their respective stated capitals to GH¢400 million 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 recapitalise the bank.
“It is sure that we will meet our capital requirement before the deadline ends,” he said.
More than 92 per cent of the ADB, which is listed on 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 to be used to raise the money except to say the process would involve the minority shareholders.
When asked if the bank would consider a rights issue — the sale of shares on discount to existing shareholders — Dr Mensah said: “No. I think the major shareholders have decided to put in the 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 that the BoG and the government were looking at raising between GH¢150 million and GH¢200 million for the bank.
The amount took into account ongoing discussions aimed at cleaning the bank’s loan book, which could lead to the write-off of some bad assets, it said.