The Head of the Finance Department at the University of Cape Coast Business School, Professor John Gatsi has expressed concerns about the creation of the Ghana Amalgamated Trust (GAT) to cushion local banks.
According to him, the GAT has not received any parliamentary approval and therefore urged Parliament to be concerned about how the Trust has been created as a public entity.
Prof. Gatsi argues that although supporting local banks is a good step by the government, the timing is wrong and the decision also unfair to shareholders.
The Finance Ministry on January 4, 2019 announced the government’s plan to support “solvent and well-run indigenous banks which were otherwise having difficulties meeting the Central Bank’s new minimum capital requirement.
All operating commercial banks in the country had up to December 31, 2018 to meet the GHc400 million figure.
The 5 banks that made the GAT list includes Universal Merchant Bank (UMB), National Investment Bank (NIB), Agricultural Development Bank (ADB), Prudential Bank and Sahel Sahara and OmniBank which has since merged.
Speaking on local station JoyNews in Accra, Prof. Gatsi mentioned: “GAT as investor is not merely supporting to lift these banks from trouble but to capture the local banks and this may be described as vulture investment whose end game is to take over the local banks.”
“The purpose of GAT should not be buying out original owners through vulture capitalism. The unfortunate thing is that the deal was closed in a manner that appeared “you sign or you collapse”, Prof. Gatsi added.
Ghana’s banking and securities sector has in the last few years witnessed major reforms including a new framework; the new Securities Industry Act, Act 929 and Banks and Specialized Deposit-Taking Institutions Act, Act 930 in September, 2016; which was implemented in 2017.
Prof Gatsi believes that the local banks are being supported because of their long history of providing banking services, nurturing of businesses, job creation and contribution to the growth of the economy.
He additionally noted that contrary to the reasons shared by the Ministry of Finance about GAT, “GAT as an investor will have both ordinary and preference shares and the preference shares will not be cumulative.”
“This further means irrespective of the conditions of the banks, the investor (GAT) must be paid the interest on the investment, which will likely make GAT majority of the 5 local banks”, the UCC Head of Finance Department noted.