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‘GAT banks’ now meet new capital requirements

BY: Maxwell Akalaare Adombila
Dr Ernest Addison (2nd left) in a chat with journalists after the news conferrence
Dr Ernest Addison (2nd left) in a chat with journalists after the news conferrence

The five indigenous banks that the Ghana Amalgamated Trust Limited (GAT) Limited is supporting to recapitalise have now met the Bank of Ghana’s (BoG)GH¢400 million capital directive, the Governor Central Bank, Dr Ernest Addison, has confirmed.

Dr Addison said the central bank considered Parliament’s approval of a sovereign guarantee for GAT as “good enough for us to recognise them as meeting the capital requirement.”

In a response to media enquiries 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.

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“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,” the governor said at the Monetary Policy Committee (MPC) press conference in Accra last Monday.

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.”

GAT formation

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).

Legal suit

Dr Addison’s assurance comes at a time the Member of Parliament for Bolgatanga Central, Mr Isaac Adongo, has sued the government and GAT for using what he described as an illegal method to invest in the five indigenous banks.

Policy rate maintained@ 16%

Meanwhile, the BoG has maintained the policy rate at 16 per cent.

It follows the MPC’s observation of upside risks to the current disinflation path.

“The committee was of the view that the pace of disinflation has slowed somewhat.

While headline inflation remains within the medium-term target band, the latest forecast shows some upside risks in the outlook but not enough to dislodge inflation expectations,” the Governor said.

“Although the exchange rate pressures have moderated significantly, the full pass through of recent depreciation to inflation remains to be assessed,” he added.

“The committee was of the view that the monetary policy stance is relatively tight and real interest rates in Ghana are comparatively high.

In the circumstances, the MPC has decided to keep the policy rate unchanged at 16 per cent,” he explained.