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Six native banks have agreed to divest a portion of their holdings to the government in return for a state equity stake to allow them to recapitalize at $ 400 million.
The banks accepted the bailout in late December 2018, paving the way for the process set up by the government allowing it to invest a total of 2 billion ¢ in the six lenders. here march 2019.
The names of the banks will however not be disclosed, which will allow an official announcement by the government and / or the Bank of Ghana (BoG) in the coming days.
It is understood, however, that the operation is intended to rescue well-governed, solvent but underfunded indigenous banks from the loss of their banking licenses or, at best, from transformation into savings and credit compliance with the central bank directive on recapitalization. .
Several sources involved in the structuring of the eleven-hour transaction told Graphic Online that under this arrangement, each bank would receive a maximum of $ 280 million of life-saving funds that would qualify as Tier 1 capital under BoG's regulations.
Banks that demand more than the $ 280 million limit have been encouraged to merge, sources said.
Another source said that the number of beneficiary banks could be increased to eight, as more indigenous banks come forward to get this support.
Qualification Criteria
1. Must be an aboriginal bank
2. Must be well governed, solvent and meet the BoG's capital adequacy requirements
Nature of the rescue
1. The rescue plan will be administered by Ghana Amalgamated Trust Limited (GAT) – a special purpose vehicle (SPV) established on December 17 to invest in banks.
2. GAT will obtain capital market funds through bond issues. The bond will be open to foreign and domestic investors, the key objectives being national pension funds.
3. The bond will be issued on the badets of the six banks
4. The amount of funds a bank needs to recapitalize will determine how much of its shares will be transferred to the government through GAT as part of the bailout package.
5. Banks are expected to receive funds by March 2019, although BoG described them as recapitalized.
6. Next, a GAT consultant will each appoint a director to the board of the beneficiary bank to help monitor GAT's interests as well as to ensure the bank's operations are prudent.
Exit strategy
GAT will leave in three to five years in one of the following cases:
1. Listing of GAT Holdings on the Ghana Stock Exchange (GSE)
2. Existing shareholders buying GAT
3. New shareholders buying GAT
The BoG's directive that banks recapitalize at $ 400 million ended on Monday, December 31, 2918, following the announcement of the closure of a bank – Bank of Baroda – and two ongoing mergers.
It was the most abrupt and the shortest in the history of bank recapitalizations in the country.
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