The five troubled indigenous banks which are under the support of the Ghana Amalgamated Trust Limited (GAT) have all met the new capital requirement of GH¢400 million by the Bank of Ghana (BoG).
This was confirmed by the BoG governor, D.r Ernest Addison when speaking at the Monetary Policy Committee (MPC) press conference in Accra on Monday, April 1, 2019.
Dr. Addison expressed the Central Bank’s contentment over the achievement and mentioned that, it considers Parliament’s approval of a sovereign guarantee for GAT as plausible.
“We at the central bank are happy with the overall guarantee that the government has given to the scheme as good enough for us to recognise that they are meeting capital requirements.”
In a response to media inquiries on the capital state of the Agricultural Development Bank (ADB), the National Investment (NIB) and three other private banks, the governor said yesterday that the sovereign guarantee was sufficient for the BoG to recognise the beneficiary banks as now being capital-compliant.
The sovereign guarantee was approved on March 15, 2019 to cover 100 per cent of risks arising from a GH¢1.14 billion bond to be issued in favour of the NIB and 70 per cent of risks associated with another bond to be issued in favour of the Universal Merchant Bank (UMB), Prudential Bank, Omnic/BSIC Bank and ADB, according to parliamentary report on the transaction.
He added that BoG’s comfort with the GAT arrangement was because the central bank “has the necessary undertakings with the government” on the transaction. As a result, he said the public could be rest assured that “the BoG has the undertakings that are required in order to consider those banks as having met the GH¢400 million.”
Last December, GAT, a government-sponsored SPV, received provisional approval from the Bank of Ghana (BoG) to invest in the five banks to help build up their capitals to GH¢400 million.
The move was the government’s response to constant appeals by indigenous banks that were facing challenges in recapitalising to GH¢400 million, a statement from the Ministry of Finance said at the time.
Although GAT has a board, chaired by consummate banker Mr Albert Essien of Ecobank fame, and a management headed by Mr Eric Otoo, a team of investment bankers, legal practitioners and other financial experts are helping it to execute the transaction. The team comprises Algebra Securities Limited, KPMG, PwC, EY, Bentsi-Entsill, Letsa and Ankomah and NTHC (the nominee shareholder).
A recapitalisation exercise that ended at the close of business on December 31, last year saw 23 banks meeting the Bank of Ghana’s GH¢400 million minimum capital requirement, while 5 others were placed on government support through GAT.
Additionally, five other banks who were in financial distress (Sovereign Bank, Beige Bank, Unibank, Construction Bank and the Royal Bank ) were collapsed into the now Consolidated Bank of Ghana (CBG), while, GN Bank was reduced into a savings and loans company.