21 October 2011

Ghana: BOG Okays Takeovers in Banking Industry

The Bank of Ghana (BoG), the regulator of the banking industry has expressed satisfaction with the current takeovers in the competitive Ghanaian banking industry.

According to the Governor of BoG, Mr Kwesi Amissah-Arthur, the mergers and acquisitions would make banks operating in the country to be very strong and resilient and profitable. It would also enable them to undertake capital intensive investments in the country and elsewhere.

He added that: "The mergers are good and it would enhance competition. We need a resilient and profitable banking system to support bigger operations" in the country.

The Governor expressed these sentiments following the recent acquisition of Amalgamated Bank (Amal Bank) Limited by Mali based Bank of Africa Group. The Group acquired a 60 percent stake of the defunct Amal Bank, with total assets of $300 million including about 16 branches across Ghana.

Also, the merger between the Access bank and Intercontinental Bank Plc has been completed. This follows the approval of the shareholders of both banks, a court sanction of the Federal High Court of Nigeria and approval of the Central Bank of Nigeria and the Securities & Exchange Commission.

Access Bank Plc has acquired 75% majority interest in Intercontinental Bank. The two banks are expected to be merged within the 2nd quarter of 2012. Intercontinental Bank is one of the banks that were rescued by the Central Bank of Nigeria.

Furthermore, Ecobank Ghana Limited, a parent company of the Ecobank Transnational Incorporated (ETI) has reached a mutual agreement with the Social Security and National Insurance Trust (SSNIT) over the sale price of The Trust Bank (TTB).

But, it is not clear how much Ecobank is offering to SSNIT for its 61.14 per cent stake in TTB. This planned sale of 61% stake has sent shivers down the spines of Ghanaians. As two pro-government groups, calling themselves BRIGDE and the Coalition for the Protection of individual Liberties and Constitutional Rights (COPCOR), are vehemently opposing the deal, wondered what could be influencing SSNIT, which holds majority stake in TTB, to be so eager to sell the 6th largest bank in Ghana, with GH ¢122 million in shareholder's funds to a foreign bank, EIT.

Mr Amissah-Arthur revealed that the total assets of the banking industry continued to grow steadily in the first eight months of the year. On a year-on-year basis, total bank assets grew by 28.2 per cent while total deposits increased by 39.2 per cent at the end of August 2011, while banking industry liquidity and profitability indicators also remained favourable.

He was quick to add that: "The asset quality of the banking industry improved. The Non-Performing Loan (NPL) ratio improved marginally to 16 per cent at end August 2011, compared with 16.4 per cent at end-August 2010. The Banks were also solvent, as the industry achieved a Capital Adequacy Ratio (CAR) of 16.9 per cent, well above the 10 per cent statutory threshold".

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