Even as fears grow that the new minimum capital requirement of GHc400 million, announced by the Bank of Ghana last August, will result in foreign owned banks taking over most of the indigenously owned banks in the country, due to the latter’s inability to raise the requisite new equity before the end of 2018 deadline, moves by a Nigerian owned bank to transform into a majority Ghanaian owned bank imminently, is setting off new thinking by industry regulators, operators and analysts alike.
Energy Bank Ghana, which is fully foreign owned, announced plans in March this year to list on the Ghana Stock Exchange before the middle of the year, through an Initial Public Offer of shares aimed at raising some GHc330 million, needed to enable it meet the new minimum capital requirement ahead of the BoG’s deadline.
Now, GoldStreet Business has learnt that the bank’s owners are deliberately seeking to ensure that the impending share offer results in Ghanaians holding a majority stake in the bank – at least 51% of the issued equity.
Energy Bank is owned by Global Fleet Oil & Gas of Nigeria with a 70% equity stake, Global Fleet (UK) with 20% and NICON Insurance with 10%, all three companies being members of the Global Fleet Group, chaired by Dr Jimoh Ibrahim, who is also chairman of Energy Bank as well.
Announcing the decision to list on the GSE, Dr Jimoh Ibrahim declared his intention to reduce his group’s equity stake in the bank to 30% and resign from his position as chairman. However, GoldStreet Business has learnt that the Global Fleet Group is willing to reduce its stake even further, to as little as 25%, if Ghanaians are willing to take up a majority equity stake through the impending IPO. Already private placement arrangements are in place with some institutional investors for some of the shares which consequently will not be available to the investing public through the IPO, although the transfer of those shares will be executed under the IPO and the regulatory authorities are all in the know.
Importantly, this attempt to hand over a foreign owned bank to Ghanaian shareholders has attracted the attention and deep interest of banking industry regulators who are using the plan to deflect accusations that the BoG’s recapitalization plans will inevitably hand over the industry almost as a whole, to foreign banks who are much better positioned to meet the new requirements within the set timeframe and still have enough extra cash to acquire their local counterparts who cannot.
Central bankers are now pointing out that the GSE is a viable alternative for local banks seeking to secure the requisite new equity. Instructively, another Nigerian bank, Access Bank, sold a significant portion of its equity to Ghanaian shareholders through the GSE in 2016.
While indigenous bank owners argue that the stock market may not necessarily cough up the required new equity financing – indeed Access Bank’s IPO only barely succeeded – industry regulators, supported by banking industry analysts, point out that the GSE is doing much better than it was two years ago and so is in a much better proposition for investors now than it was then.
The more cynical ones are arguing that the reluctance of owners of minimum capital deficient indigenous banks to try raising the equity they need from the GSE simply shows that they do not want to give up ownership control and the authority it confers on them to engage in unsavory activities such as connected, and family and friends lending which is proving to be the bane of banks now facing solvency problems.
Some, GSE officials, encouraged by the Energy Bank example, are now considering giving indigenous banks that wish to use IPOs to raise new equity, incentives such as those offered small and medium sized companies listing on the Ghana Alternative Market (GAX) to further persuade them in this direction.
If indeed Energy Bank ends up a majority Ghanaian owned bank it will be the second time this has happened. A decade ago, the UT Group acquired a majority stake in the erstwhile foreign owned BPI Bank, before rebranding it UT Bank and listing it on the GSE.