Majority, Minority disagree over GHC 2 bn facility

The Majority and Minority caucuses in Parliament have parted ways in the approval of a GH¢2 billion for the Ghana Amalgamated Trust (GAT) Limited to support five indigenous Ghanaian banks with the latter staying away from approval exercise.

Whiles the Minority described the GAT as a pseudo entity; adding that it does not believe in its legal arrangements, the Majority maintained that it was important for the Trust to be given the guarantee to capitalize the banks in response of the Bank of Ghana’s new capitalisation policy of GH¢400 million per bank from GH¢120 million. 

After more than two hours of debate in Parliament on Wednesday, the House deferred the approval and the passage of a resolution to give backing to the facility because it could not form a quorum. 

The agreement and the accompanying resolution was by a Majority decision, was passed yesterday after the Speaker put the question.

According to the report of Parliament’s Finance Committee, the Sovereign Guarantee is aimed at supporting the GAT to issue instruments on domestic debt market which would target private sector institutional funds, including pension and insurance funds as well as foreign and other investors, to be used as equity investment in the selected banks. 

The listed solvent but struggling banks to benefit from the facility are the National Investment Bank (NIB), the Agriculture Development Bank (ADB), Prudential Bank, Universal Merchant Bank (UMB) and Sahel Sahara/Omni Bank. 

Per the arrangement, the GAT has a maximum time horizon of five years to exit its holding in the banks and to repay its investors.

The beneficiary banks, the report said, will be required to sign on to strict governance and operations criteria to ensure funds were protected and well deployed to yield the best returns as well as support them with appropriate management to undergo business transformation programmes. 

The guarantee, to be provided at two levels, are 70 per cent to investors who invest in ADB, UMB, Prudential and Omni/Sahel Sahara up to GH¢780 million at an interest rate of 21 per cent and 100 per cent guarantee to investors who invest in NIB up to GH¢1.14 billion at same interest.

Moving the motion for the approval of the facility, Chairman of the Finance Committee, Dr. Mark Assibey-Yeboah said of the 16 banks which met the recapitalization policy requirement, only 25 per cent were Ghanaian own; a reason why the GAT facility was needed to have five additional Ghanaian owned banks in the industry. 

Opening the debate for the Minority, Isaac Adongo, MP, Bolgatanga Central feared that by this arrangement, government was on its way to privatize the two state owned banks in the list of beneficiaries – NIB and ADB.

In his view, if government was genuinely committed to recapitalizing the banks, it would have done so without using the GAT, adding that “we are in the dark as to the agreement between the boards of the banks and the GAT” as they were given the agreement on the two private banks.

Mr Adongo served notice that “a future NDC government will be interested in this transaction.”

But Bantama MP, Daniel Okyem Aboagye, a member of the Finance Committee said “if we don’t support local banks, foreign banks will take over our banking sector.” 

Mr Aboagye said the purpose of the GAT was “to infuse into the struggling banks what private sector is good at – efficiency” urging his colleagues to support the deal if they believed in Ghana and the wellbeing of local banks. 

The Minority Leader, Haruna Iddrisu, MP, Tamale South, who indicated that Minority was not going to be part of the approval of the deal said government could have avoided the GAT arrangement if it had given the banks more time to capitalize as they have asked for. 

He said the Minority was not against the capitalization of the banks but against the approach which he said does not give the country value for money. 

Mr Anthony Effah, MP, Assikuma/Odoben/Brakwa, on behalf of the Majority Leader, said due process was followed in putting together the GAT structure. 

A special Committee, Mr Effah explained that government, through a special Committee drew up the structure of the GAT to provide good oversight. 

BY JULIUS YAO PETETSI