Parliament approves GHc2 billion bond to save 5 banks


 

Parliament has approved the issuance of a Sovereign Guarantee of up to GH₵2 billion in favour of Ghana Amalgamated Trust (GAT) Limited.

GAT is aimed at rescuing some five indigenous commercial banks that failed to meet the BoG’s minimum capital requirement of GH¢400 million.

The beneficiary banks are the state-owned ADB Bank and National Investment Bank (NIB). The rest are Universal Merchant Bank (UMB), Prudential Bank and OmniBank, which is merging with Sahel Sahara Bank.

Government in 2018 backed the special vehicle (GAT) to raise up to GH¢2 billion and invest in five indigenous banks.

Already, GAT has appointed Mr Albert Essien, formerly of Ecobank and Mr Eric Nana Otoo, formerly of Goldman Sachs, Mckinsey and Duet as its Board Chairman and Managing Director (MD) respectively.

GAT has committed funds from pension funds and other investors, through a bond programme, with proceeds of up to GHS2 billion to be used for equity investment in the eligible indigenous banks, as determined by the investors, a move the Minority in Parliament has spoken against.

According to government, the bonds issued to the Pension Funds will be listed on the Ghana Fixed Income Market (GFIM) for liquidity purposes.

But the Minority believes such an arrangement would allow the private entity to take over the ownership of the local banks with its 30 per cent stake.

The Minority further indicated that managers of local banks had requested the government to give them time to raise the GHc400 million minimum capital requirement which had been increased from GHc120 million but the government failed to honour that request.

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