BoG applauds move to merge NIB, ADB

The central bank has endorsed plans by government to merge the operations of ADB and the National Investment Bank (NIB) to meet the new GHS400 million minimum capital requirement.

Dr. Ernest Addison told the press on Monday that he sees nothing wrong with government’s plans to merge the operations of the two banks into a Development Bank.

According to Dr. Addison: “this will be consistent with the new requirement for capitalisation for banks. To the extent that ADB has to raise 400 million and NIB too same, and the fact that government has fairly large shares in both banks, it makes sense to start thinking of consolidating and I don’t see any difficulty with that.”

Government has said the new bank will mobilise private capital toward agricultural and industrial transformation.

Dr. Addison said the central bank, which has given banks up to end of this month to submit their recapitalisation plans, will not stand in the way of government if it comes to merging the operations of the two state-owned banks.

In September, the Bank of Ghana (BoG) introduced the Internal Capital Adequacy Assessment Process (ICAAP) under the Basel II framework.

The ICAAP will require banks to more than treble their minimum capital to GH¢400m (US$91.6m) by December 31, 2018.

This represents a much bigger jump than previous increases imposed by the regulator over the past decade to strengthen the balance sheets of Ghana’s banks.

The NIB has a capital shortfall of about GH¢255million, a stated capital of GH¢70million and an income surplus of GH¢74 million as at July 2017.

The ADB – a publicly-traded company with majority government ownership – also has a capital shortfall of GH¢310million and a stated capital of about GH¢275million, but a negative income surplus of about GH¢185million.

The ADB, in December last year, started trading on the local bourse. Institutions with an interest in the company include: SSNIT, 9.5% of the shares; Starmount Development Company Limited, 11%; and SIC Financial Services 10%.