Business

Ecobank alleys fears of possible takeover of local bank

Ecobank Ghana has dismissed rumours that it is in talks with indigenous banks to either merge or takeover their institution, as many are struggling to meet the Bank of Ghana’s new minimum capital requirement of GH¢400 million by the end of the year.

Opposed to popular view that local banks will not be able to raise the required funding to stay in business, the Pan-African bank is optimistic indigenous financial institutions can come up with the amount, hence the ruling out of M&A in its short- to medium-term planning.

“Looking at the local banking landscape and sponsors across the industry, we believe that local players will meet the minimum capital required by the Bank of Ghana (BoG). Mergers and acquisitions are therefore not being considered at the moment,” Daniel Sackey, Managing Director of Ecobank said while speaking to the media after the bank’s Annual General Meeting.

Mr. Sackey indicated that the bank is committed to growing the business organically in the medium- to long-term with the ultimate aim of ensuring financial inclusion throughout the continent.

The increase in the current minimum capital of GH₵120,000 by 233 percent to GH¢400 million, seeks to strengthen the banking sector, reduce the number of bankers, and build a resilient industry that is capable of supporting the country’s ambitious growth agenda.

Though most banks have submitted their recapitalisation plans to the central bank, the local banks with 100 percent local ownership – recently petitioned the Jubilee House to intervene and extend the deadline.

Bank of Ghana allowed the purchase and assumption of Capital and UT Banks, two local banks, by GCB Bank in August 2017.

Six months later, uniBank – another local bank – was placed under the administration of KPMG after Governor of the Bank of Ghana, Dr. Ernest Addison disclosed that uniBank has been declared insolvent.

The central bank had indicated that uniBank’s capital has not been close to the 400 million cedis minimum requirement expected of commercial banks by December 2018.

The central bank has recently appointed an advisor to guide Sovereign Bank, another local bank, onto a healthy footing due to governance and capitalisation challenges.

The remaining local banks, some 17 of them, have made no secret of the fact that they are struggling to raise the GH₵400,000 by the December deadline.

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