State firm to the rescue of Meridien bank in Ghana

Ghana's Social Security and National Insurance Trust has come up with a $7.2 million rescue package to shore up the local unit of pan-African bank Meridien BIAO, a bank spokesman said recently, reports Reuters.

The spokesman at the Meridien BIAO's regional office in Abidjan said the rescue plan was discussed at an emergency board meeting in Accra last week.

The board met amid pressure from depositors following the Meridien BIAO's problems with regulators elsewhere in Africa.The spokesman said the Ghanaian unit's problems began even before the April 25 court decision in the Bahamas placed holding company Meridien International Bank Ltd (MIBL) in liquidation. This prompted depositors to withdraw money from branches in Niger, Gabon and Burundi.

"The Social Security and National Insurance Trust (SSNIT) which is an institutional shareholder has been coming to the rescue of the bank because of a growing trend of withdrawals in the last two months," the spokesman said.

"They made available facilities of about 2.5 billion cedis ($2.2 million), which they had in deposits, and they have also made about $5 million available in case there is trouble."

The total amount of the package roughly corresponds to what MIBL owes the Ghanaian subsidiary, the spokesman added. Ghana Reinsurance Organisation, a state corporation like the SSNIT and equally owning about 10 percent of the local subsidiary, was now considering whether to go along with the recapitalisation plan, he said.

Such plans will have to be put to MIBL's liquidators, accountants Peat Marwick. MIBL owns 74 percent of Luxembourg-based Meridien BIAO SA which in turn controls the Meridien BIAO network of banks in more than 20 African states.

Meridien was established by Greek-Cypriot Andrew Sardanis, now a Zambian citizen. It expanded its African network in 1991 after buying out the majority interests of Banque Nationale de Paris (BNP) in Banque Internationale pour l'Afrique de l'Ouest.

Bankers say Meridien's liquidity problems that have prompted the intervention of regulators in Kenya, Tanzania, Zambia, Swaziland, Gabon and Burundi, go back to a costly $74 million recapitalisation programme following the deal with BNP.