Sale of Merchant bank to Fortiz, - Parliament must act

Sale of Merchant bank to Fortiz, - Parliament must act with responsibility

The coordinator of Alliance for Development and Industrialisation describe parliament’s move to probe the sale of the ailing Merchant Bank to Fortiz as a waste of public resources. We further state that this attitude and culture do not augur well for the support, development and growth of the private sector and deter private sector participation in the public sector.
Accordingly, we request the Speaker of Parliament and the Finance committee to act with facts and total absolute impartiality in carrying out their duty as a responsible and august house.

The facts show that Merchant Bank needed a bail out and Fortiz intervention came at the right time and with the best structure.

Given that we have had experiences in the past with collapsing local banks as in the case of the Bank for Housing and Construction, we should proceed with caution as we seek to constantly probe a seemingly upright transaction which seeks to rescue the fortunes of another ailing bank. The occurrence of the recent past with regard to this particular transaction will only continue to shake investor confidence in this bank and will lead to a total destruction of the bank with implications not just for the staff but for the banking industry and economy at large.
What some sections of Ghanaian have failed to acknowledge was that Fortiz, as an equity firm could have invested in any prevailing viable business in this country but decided to take up this bank with its liabilities which had contributed to the decline of the bank, with the aim of putting back the bank on track to fulfillone of its main core mandates, which is providing financing to local and international corporates, and local Small and Medium Enterprises (SMEs) and individuals.
‘With the fact at hand, we believe that the deal is fair and transparent and will boost local confidence in banking and also facilitate industrial development of the country’
This statement urges Ghanaians to move away from the partisan direction that seems to define the basis of decision making in this country, especially when it comes to supporting our own locally grown private sector participation.
‘So far, Fortiz has injected GHC90million into Merchant Bank and had also put in place strategies to recover 70 percent of the loans in its first year of operations, which would enable SSNIT increase it's shareholding in the bank in the near term.
FORTIZ have taken on the larger risk of investing in an ailing local bank which has issues resulting in part from some level of government interference over many years all of which have made it impossible for the bank to invest to expand its business and network to enable it compete favorably and grow locally.
This transaction is beneficial to SSNIT and its contributors who will be bailed out completely by a private sector participant.
We need as a country to avoid the over exploitation of foreign entities which would have been the case with the First Rand transaction where a foreign company ie First Rand were expecting SSNIT to cough up a net amount of approximately GHC100million in order to retain a small 25 percent shares of Merchant Bank. The fact remains that First Rand did not want to take on any of the existing troubled assets of the bank and would have left these for SSNIT to manage. This would have been a major cost to SSNIT and pensioners funds that we speak about protecting.
In our opinion, the sooner we let this transaction be, the better we would all be firstly as Ghanaians, secondly as contributors to the Fund and thirdly as a nation that supports development and encourages indigenous participation.
For further details contact;
Fred Mensah
Tel. 0570794270