A fortnight after the Bank of Ghana announced the completion of its almost two year long fundamental restructuring and reform of the country’s universal banking industry, which the central bank confirms has reduced the number of duly licensed banks from 34 to 23, several banks which are supposed to have ceased to exist in their erstwhile forms are still doing so. This is because the mergers announced by the BoG at the start of this month as completed have not been fully consummated.
Of the three mergers, only the first to start negotiations – the one between Omni Bank and Sahel Sahara Bank is anywhere near completion, the merger process has been started in mid-2018. The other two mergers, between First Atlantic Bank and Energy Commercial Bank, and between First National Bank and GHL Bank respectively, only commenced the requisite processes late last year.
Instructively, even though both are effectively acquisitions that will leave the resultant merged entities operating as First Atlantic and First National respectively, the two banks being acquired are still operating under their pre-merger corporate identities, leaving their smaller, and relatively uninformed retail customers somewhat confused as to who they are actually banking with. Most importantly though all their customers are being fully served by their banks even though they are about to lose their erstwhile corporate identities.
Nevertheless, even as the officials of all the banks involved give assurances as they explain that this is a temporary situation which is about to be resolved, neither of the two banks being acquired are able to commit to any medium- or long-term transaction. This in part because of impending changes of those who would manage such transactions, and in part because the on-going merger negotiations are based on their balance sheet positions as at the time the mergers were agreed upon by all counterparties and subsequently approved by the BoG.
Instructively, although still operating under their pre-merger corporate identities, the banks about to be acquired have ceased all publicity and promotional activities in view of the impending expiration of those corporate identities. Under the Banking Law 930, individual banks that are short of the prescribed minimum capital in force (which is now GHc400 million), are not allowed to engage in certain activities such as opening new branches and in certain circumstances taking on new deposits and booking new loans although it is uncertain whether these constraints are being enforced since the completion of the ongoing mergers sooner than later is certain.
Goldstreet Business learnt that the BoG is supporting the speedy conclusion of the merger talks as it wants normalization – meaning a playing field where every individual banking entity in operation has at least the minimum capital – to be restored as quickly as possible.
By Toma Imirhe