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HFC takeover to  discourage listing on GSE

HFC takeover to discourage listing on GSE

A section  of the country’s private sector, vexed by the cheeky take-over of indigenous HFC Bank, by Trinidad’s Republic Bank, warns the takeover can  dampen the listing of local firms on the Ghana Stock Exchange (GSE).

Many observers of the Ghanaian market contend that the regulatory authorities, especially the Securities and Exchange Commission (SEC) and the Bank of Ghana (BoG) did not do much to support a local champion under predatory attack from a foreign invader, despite overwhelming evidence to that effect.

“By the stroke of the pen that forced HFC Bank to be taken over, we’ve killed the interest of Ghanaian companies to want to list on the GSE, because if I listed on the bourse and somebody acquires 32 per cent stake, they immediately qualify to take over my company; why would I do that?” queried a Ghanaian businessman.

Republic Bank, on April 23, 2015 offered to purchase HFC Bank shares at GH¢1.95, a hike against its earlier offer of GH¢1.60, last year, ahead of HFC Bank’s Annual General Meeting (AGM) that same day, which saw movements of some key personalities in the local bank, including its Managing Director, Mr Asare Akuffo, as well as the election of some new directors.

The move was ostensibly to enable Republic Bank to obtain at least 51 per cent stake in HFC Bank to achieve its mandatory takeover, after the Trinidadian bank was offered that opportunity by the SEC rules this year. 

The takeover effort has witnessed some protracted legal scrimmages as some key stakeholders accused the foreign bank of unfair practices, including some that they hold border on criminality.

Antagonists to the predatory takeover argue that while the Republic Bank has not demonstrated good faith, the Ghanaian regulatory authorities have bent over backwards to accommodate them to the detriment of the local bank.

How it began

HFC Bank, they claim, invited Republic Bank in with its eight per cent as partners to help HFC meet their capitalisation requirements on the understanding that Republic Bank will come in as investors with no interest in seeking ownership, since it lacks the capacity and technical skills in mortgage business, the core business of HFC.

However, privy to inside information that Union Bank of Nigeria wanted to dispose its shares in HFC, Republic Bank went behind and bought those shares and subsequently started mopping up other shares through a Trinidadian front company, Yellow Tide.

While it is on record that the SEC had fined Republic Bank for breaking a covenant, as well as it being on record that Republic Bank had written to the regulator of its disinterestedness in ownership of HFC, the SEC insisted, once they had crossed the mandatory threshold, the Trinidadians had to take majority interest.

That has led to allegations of powerful but shadowy figures manipulating things from behind the scenes.

Lending credence to such conspiracy theories, according to opponents of the takeover, was the fact that the SEC had previously waived this requirement for some institutions; why then did they refuse to waive, at this juncture, for HFC?  

They argued that HFC was started by Ghanaians and nurtured to its current height to become a pillar of the community, providing housing financing to the community, and therefore deserved special support.

HFC’s unique role

This is more so, it is argued, as government has given HFC support of long-term funding, of about 20 to 50 years to build housing for workers at a cap of 15 per cent; while SSNIT has also invested some money in HFC, also of a long term nature.

“So now that the foreigners are coming to acquire HFC, are they going to dispose the government’s money, since government doesn’t put its money into foreign institutions? And is the Social Security and National Insurance Trust (SSNIT) going to take its money back, because this is workers’ money?” an entrepreneur asked.

His argument is that SSNIT shares, in HFC, are held by SSNIT in trust for the workers of Ghana who have contributed. It is not money owned by the management of SSNIT to be disposed of as they please so, they ought to have workers’ mandate before they go ahead.

“How can we know that tomorrow they’re not going to jettison the mortgage part and keep only the universal part and run with it, to the detriment of the Ghanaian mortgage market? And what can anyone do,” he asked.

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