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We did not acquire ADB shares with BoG liquidity support - BELSTAR

BY: Enoch Darfah Frimpong
Dr Ernest Addison — Governor of the Bank of Ghana
Dr Ernest Addison — Governor of the Bank of Ghana

The BELSTAR Capital Limited (BELSTAR) has expressed discomfort and surprise at the Bank of Ghana's (BoG) annulment of the share purchase of four institutions in the Agricultural Development Bank (ADB).

In a statement issued by its chairman on Wednesday July 18, 2018, reacting to the BoG's move, BELSTAR said the assertion by the central bank that the shares in ADB, acquired through an Initial Public Offering (IPO) by BELSTAR and the other three companies, were acquired by the use of the BoG's emergency liquidity support obtained by uniBank, and placed at the disposal of the BELSTAR consortium in the form of a loan, "was not true."

Related: Bank of Ghana annuls shares of 4 institutions in ADB

BoG on Monday announced that, with immediate effect, it has revoked the share purchase of four institutions in ADB, after declaring them not fit and proper to own shares in the bank.

This means that Belstar Capital Limited (Belstar), Starmount Development Company Limited (Starmount), SIC-Financial Services Limited (SIC-FSL) and EDC Investments Limited (EDC) are no longer shareholders of ADB.

By this ownership of the bank automatically reverts to the government of Ghana and Bank of Ghana through the Financial Investment Trust.

The BoG said, "Belstar and Starmount are not fit and proper persons and cannot permit them to continue to hold shares acquired directly or indirectly in ADB."


The four investors owned 51 per cent of ADB, which was listed on the Ghana Stock Exchange (GSE) in December 2016.

BELSTAR reaction

Reacting, BELSTAR said while information available to it confirmed that owing to a default in loan repayments to uniBank by key government-related entities, the bank had sought emergency liquidity support from BoG, the quantum of depositors' funds available to uniBank, at the time of the IPO, far exceeded the amount of money loaned to BELSTAR to acquire the shares in ADB.

“We wish to say that we will take steps to correct the erroneous impression that the BoG has put out and use the appropriate channels to restore our business interest to encourage other private sector players to believe in the free market principles, for that is key to creating a Ghana Beyond Aid,” the statement said.

It said while information available to BELSTAR confirmed that owing to a default in loan repayments to uniBank by key government-related entities, the bank had sought emergency liquidity support from BoG, the quantum of depositors' funds available to uniBank, at the time of the IPO, far exceeded the amount of money loaned to BELSTAR to acquire the shares in ADB.

It said as borrowers, BELSTAR would not know the source of the money offered but given “what we know to be the state of affairs at the time of the IPO, uniBank or any bank would rather lend the cheaper depositors fund of which they held nearly GH¢3 billion as opposed to the emergency liquidity support of nearly GH¢800 million. We believe that the BoG statement is incorrect, untrue and regrettable.”

It said the statement purported to have emanated from the central bank and published in the Daily Graphic painted a scenario that there was some sort of collusion among the consortium.

The allegations contained therein were also grounded in the erroneous thought that the initial lending to BELSTAR was from the emergency liquidity support.

“In the circumstance, all those allegations collapsed on the face of it because their foundation is flawed for one cannot put something on nothing and expect it to stand. These allegations are also regrettable to say the least, “ the statement said .

It said the IPO regulations required BELSTAR and the consortium to seek permission from the BoG once they intended to own a certain quantum of shares.

“Such permissions are requested and granted or declined in accordance with ACT 930, the Banks and Specialised Deposit Taking Institutions Act. Thus the BoG is aware and did grant all the permissions necessary to put the BELSTAR-led consortium in the majority. It is thus unfortunate for the statement to suggest that the transactions were carried out without the knowledge of the BoG.

“BELSTAR and its consortium are reputable business entities and are led by credible actors with years of experience in money market and financial transactions. We wish to say that we will take steps to correct the erroneous impression that the BoG has put out and use the appropriate channels to restore our business interest to encourage other private sector players to believe in the free market principles, for that is key to creating a Ghana Beyond Aid,” the statement said.

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