ADB not strong enough to  absorb NIB
Ken Ofori-Atta, Finance Minister

ADB not strong enough to absorb NIB — Banking expert cautions

Any move to merge ADB Bank and the National Investment Bank (NIB) in their current states will be a disaster, Banking Consultant, Dr Richmond Atuahene, has warned.


He said ADB in its current state post the Domestic Debt Exchange Programme (DDEP) did not have the muscles to take over a bank like NIB which has been battling for about six years now.

Following the completion of the financial sector reforms, all the banks operating in the country, successfully recapitalised to GH¢400 million with the exception of NIB who are yet to do so.

The NIB, together with four other banks namely ADB Bank, OminiBSIC, UMB Bank and Prudential Bank were given government guarantee through the Ghana Amalgamated Trust (GAT), which was a special purpose vehicle set to help these five banks recapitalise.

NIB, however, failed to utilise this opportunity as its liquidity and capital challenges far exceeded what was originally envisaged and has still remained undercapitalised. 

With the bank being a state bank, the considerations were different, and therefore the bank has continued to operate till now despite not meeting the new minimum capital requirement.

Recently, there have been media speculations of a possible takeover of NIB by ADB, which is also owned by the state.

Talks of a merger between the two state owned banks are not new, as the Finance Minister, Ken Ofori Atta, in 2017 hinted of a merger of the two banks to form a Development Bank.

The Finance Minister at the time argued that a merger of the two banks could help create a development-oriented bank that could finance the government's vision of transforming the economy through increased investments in agriculture and industrialisation.

This position was then supported by the Governor of the Bank of Ghana, Dr Ernest Addison, who also argued at the time that it made sense for the government to merge the two banks, citing the challenge of the state having to recapitalise the two banks separately.

ADB not strong enough 

Reacting to the recent merger talks, Dr Atuahene said while it might be a laudable idea, merging the two banks in their current states would require more work and capital.

It will be recalled that ADB was one of the banks that needed the intervention of the Ghana Amalgamated Trust Fund to recapitalise to GH¢400 million during the banking sector reforms by the Bank of Ghana.

Quiet recently, the bank was one of the hardest hit during the DDEP, recording losses of GH¢371.2 million in the 2022 financial year.

He said ADB in its current state needed to be recapitalised and therefore merging it with another bank which was also struggling was not the right thing to do.

Dr Atuahene said NIB has had its own problems for a long time; if the government had been proactive enough, those issues would have been resolved long time ago.

“If you look at the strength of both banks, ADB is not very strong to be able to take over NIB. In a merger or takeover, we expect at least one of the parties to strong in terms of capital and other resources but none of the two banks is in a good position at the moment.

“ADB is not a strong bank that anybody should recommend such mergers. This will create another problem. If the two come together, the single entity must have a stronger base in terms of capital and everything but if we bring them together in their current states and we don’t take care, it could make the two worse off,” he explained.

He said if the government could find the needed resources to strengthen ADB to a point where it could take over NIB, then that would be a great idea.

“If government can resource ADB such that the merger will be straight forward, so be it but if they merge at the current state, it could be a disaster,” he cautioned.

Viability of NIB

At a recent Monetary Policy Committee press conference, Dr Addison said the central bank was in discussions with the government to assess the viability of NIB.


The discussions which are expected to be concluded by next year would determine the fate of NIB.

Under the IMF programme, the BoG has committed to completing the remaining tasks from the financial sector clean-up and these tasks include addressing the insolvency of NIB as well the long-standing undercapitalisation of several special deposit taking institutions (SDIs). 

Dr Addison said the issue of NIB and other undercapitalised institutions would obviously form part of the financial sector policy under the IMF programme.

He said once the government was done with the immediate issues of the impact of the DDEP on banks, it would go back and have a relook at these institutions and make an assessment on whether they are still viable or not.


“The NIB is one of the banks that we will make that assessment on, whether we want to make it viable or not. If it is viable and the government can find money to recapitalise it, then Yes, but if it is not viable, then obviously we will have to find a different use for that instrument.

“These are ongoing discussions between us and the international partners and I believe that in the next year or so we will get a clearer sense of how to handle those particular institutions that are very weak.” he stated.

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