Take stakes in banks – Andani urges pension fund managers
The Managing Director of Stanbic Bank Ghana Limited, Mr Alhassan Anadani, has asked for strong collaboration between banks and pension funds to help create an enabling environment that will allow fund managers of tier two and three contributions to take stakes in banks.
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The collaboration should precede the creation of a robust pensions sector that will thrive on strong commitment to ethics but resilient enough to birth fund managers that can partly or solely own banks, Mr Andani, who is also the president of the Ghana Association of Bankers (GAB), told the GRAPHIC BUSINESS on September 18.
He was speaking in an interview ahead of today’s GRAPHIC BUSINESS/Stanbic Bank Breakfast Meeting on pensions at the plush Labadi Beach Hotel.
On the theme; ‘The Role of Pensions in National Economic Development and Sustainability,’ the meeting is meant to provide policymakers and stakeholders a common platform to deliberate on happenings in the nascent industry.
Key on that agenda is how pension funds can help steer growth in adjoining businesses, including those in the banking and real estate sectors.
With Bank of Ghana (BoG) requiring banks to recapitalise to GH¢400 million between now and December 2018, the Stanbic Bank MD said the strong growth in pension funds presented a fine opportunity for banks that would be seeking new partnerships to be able to meet the requirement.
Beyond supporting undercapitalised banks to meet the central bank’s requirement, the seasoned banker observed that allowing domestic pension funds to take stakes in banks would help limit the influx of their foreign counterparts into the banking sector.
This should also help bring down the capital flight that an increase in the ownership of banks by foreign pension funds has on the financial sector, and the economy at large.
“The beauty is that if we have domestic fund managers taking advantage of the recapitalisation, that will be better, otherwise, we will have a situation where these banks will go out there to look for capital and the institutions that will come, may be pension funds outside this country.
“So, basically, they will make these investments and take the benefits out of this country to pay their pensioners, and that is why it is good for us to build our domestic pension funds to be able to take advantage of this,” he said.
A successful take up of stakes in banks by tier two and three fund managers will also mirror the situation in the tier one scheme, where the Social Security and National Insurance Trust (SSNIT) is a part owner of 15 listed and unlisted banks and financial houses in the country.
Building capacity
As of July, this year, contributions under those two tiers totalled GH¢8.3 billion of which GH¢2.7 billion is still at the temporary pensions account (TPFA) at Bank of Ghana (BoG).
Mr Andani was optimistic that the meeting would underscore the need for employers and employees to take keener interest in pensions to help build a robust industry that could rub shoulders with peers in foreign markets.
Beyond ensuring that the contributions of workers are safe and properly invested, the president of the Bankers Association said a resilient pensions industry also ensured that fund managers were properly equipped to take advantage of emerging opportunities such as the one presented by the recapitalisation.
“Now, banks are faced with capital shortages and they will be going out to raise more capital. Coincidently, the institutions that have these capital are pension funds and at the moment, that is a great opportunity to Ghanaian pension funds but the question is whether they have the skills,” he said.
Long-term capital
For decades, lack of long-term capital has been the bane of the economy, making it practically impossible for banks and other lending institutions to give loans with maturity periods beyond five years.
Mr Andani said robustness of pension funds could soon put to rest such a challenge but only if the sector was properly developed.
With pension funds being long-term savings, he said, the proper development of pensions should “enable us the banks to make these long-term loans.”
“How do we do it? Banks can model long-term investment instruments, we get them rated and then pension funds can buy those instruments. Most economies that have developed did that on the back of solid pension schemes that create these long-term pools of funds, which can then be invested in productive sectors of the economy.
“These investments do not only gain in capital appreciation but also generate significant annuity income,” he explained.
He, thus, advised employers to work with their employees to ensure that the country had “pension schemes that are ethical and serve the long-term corporate social responsibilities of companies towards their staff.” — GB
