With barely two weeks left to the December 31 deadline, set by the Bank of Ghana in September last year, for banks to recapitalize to at least GHc400 million or lose their operating licenses, several banks are engaged in a race against time to complete mergers with each other, since they have not been able to raise the requisite new equity capital on their own.

There are three merger negotiations currently ongoing, one of which involves three banks and it is still uncertain whether the intricacies involved in merging such large financial institutions can be completed within the couple of weeks left.

It is instructive that despite being informed of the new minimum capital requirement, some 15 months ago, none of the ongoing merger negotiations were started before the third quarter of this year, with less than six months to the deadline. Indeed, the latest one to open negotiations, between First Atlantic Bank and Energy Commercial Bank was decided on just last week.The other two – one involving Omni Bank and BSIC Bank, the other three way proposal, involving Premium Bank, Heritage Bank and GN Bank – started negotiations in the third quarter of this year.

Not only is it now unlikely that the merger deals can be completed before the looming deadline, but none of them can produce a consolidated entity that can fulfill the new minimum capital requirement without further new capital injections either from the existing shareholders of the merging banks, or altogether new investors.

As at the September 30, 2018 Omni Bank only had GHc97.368million in eligible capital while BSIC had 97.466 million. A merger between the two at that time would only have produced a merged bank with GHc194.867 million in core capital, which is less than half of the requisite minimum.

The proposed merger between First Atlantic Bank and Energy Bank is similarly inadequate. Indeed, this is actually a proposed takeover of Energy Bank by First Atlantic, following the former’s, failure to achieve even the acceptable minimum subscription of its GHc340 million Initial Public Offer of shares

This means Energy Bank only has about GHc55.05 million to bring to the table, which is why it is to be taken over by First Atlantic which can contribute some GHc211.34 million if the negotiations can be successfully completed. But even combined, they would only have about GHc266.39 million,although both banks are making profits which would add a little to their war chest.

As for the other proposed merger involving three banks, figures for GN Bank and Heritage Bank are not readily available to the public, but Premium Bank’s less than GHc100 million in eligible capital as at mid-2018 is indicative that even the three combined would not be able to meet the requisite minimum.

Another problem is that the mergers being negotiated are largely marriages of convenience between strange bedfellows. Unlike with most corporate mergers, the potential partners do not make for clear strategic fits and have very different corporate cultures, structures and market positioning.Indeed, the partners have come together purely out of the need to strive towards achieving the new minimum.