HFC takeover bid: SEC faces criticism

The Managing Director of HFC Bank Asare Akuffo is accusing the Securities and Exchange Commission (SEC) of “being unfair” in its refusal to grant a waiver to Republic Bank when the Trinidad and Tobago-based lender, which owns 40 percent of HFC, decided not to exercise the right to take over the Ghanaian bank.

“I don’t know what happened, but I can say that SEC’s position in this matter is one of my saddest experiences with a public institution in this country. SEC’s refusal was so zealous that you ask yourself what do they want or have against HFC. That is where we have a problem,” Mr. Akuffo said.

Speaking in an interview on the sidelines of the bank’s 23rd annual general meeting in Accra yesterday, he said the board of the bank will issue a statement very soon on the attempted takeover by Republic Bank.

He explained that for Republic Bank, a foreign bank, to be allowed by SEC to make a mandatory offer to shareholders of a local bank when the bank (Republic Bank) itself wanted a waiver is saddening.

“We have a foreign bank that is coming in to invest in a local bank developed from scratch, and if that foreign bank comes in and says that ‘I don’t want to have majority control in this bank, so give me a waiver so that I don’t go out and buy out other shareholders’, why should it be difficult for a Ghanaian regulator to grant a waiver and rather ask that the foreign investor to go ahead with full speed?”

Mr. Akuffo noted the irony of the situation, stating that at the time SEC was rejecting the waiver from Republic Bank it was granting one to the Abraaj Group -- which is gradually taking over Fan Milk, a listed company on the Ghana Stock Exchange (GSE).

“Sometimes events come as though they are coincidences but are very interesting. At the time SEC rejected this request, Abraaj, a foreign private equity fund, acquired Fan Milk. Abraaj bought more than 30 percent but applied for a waiver and it was granted.

“SEC, with very knowledgeable and experienced people, knows that those rules are there for takeovers, but the rules also state clearly that in the case of banks and insurance companies, they are subject to the approval of the Bank of Ghana and National Insurance Commission respectively, because they are sensitive institutions.

“Despite that, SEC wrote to them (Republic Bank) to go ahead with the takeover without reference to the Bank of Ghana. So, initially, the BoG was not in the know.

“We complained to BoG and the BoG said SEC cannot do that, supporting HFC and Republic Bank and asking SEC in a letter to grant the waiver. SEC refused and eventually BoG gave in and gave the go-ahead. But the position of HFC has notchanged.”

Managing Director of Republic Bank David Dulal-Whiteway, who sits on the board of HFC, said his bank has not made any approach to shareholders yet because there is a laid-down process that must be followed.

“By law, once you cross 30 percent you can make an offer to the remaining shareholders; and for that, you have to get approval from the Bank of Ghana, which we have now but we are yet to speak to the shareholders. There is a process we have to go through and we haven’t reached that stage yet.

“We just have an offer document which will have to be made public to the shareholders; but if somebody is interested, then we are mandated to buy.”

Mr. Dulal-Whiteway added that Republic Bank has done a lot of due diligence and has taken a decision to invest in Ghana not only from a banking point of view, but with the entire economy in mind.

“We do think that there are good linkages between our oil and gas sector in Trinidad and Tobago and what is happening here. When we think of Republic Bank, we see ourselves as a conduit or umbilical cord that can bring both countries together and tighten relationships. That is one area HFC is strong in, and we are working with HFC in that area. We are very positive about the country and we are very happy to be here.”