Monday, 18 December 2017
Banks target stock market for additional capital

Banks target stock market for additional capital

By Augustine AMOAH

EXISTING and new banks could resort to the Ghana’s capital market to raise long-term funds to recapitalize their operations as the deadline for the new capital requirement of GH¢400 million draws closer.

The lenders have up till December 31, 2018, to meet the new capital requirement or be forced to be taken over or revert to savings and loans.

Out of the eight banks operating in Ghana that have listed on the Ghana Stock Exchange (GSE), Business Finder can confirm that only three - Ecobank Ghana, GCB and Standard Chartered Bank - have already met the new Central Bank’s requirement ahead of the deadline.

However, HFC and Access have given strong indications of raising additional capital from the stock market. Information gathered by this paper also indicates that CAL and SocieteGenerale might decide to raise more money to boost their positioning.

Some local banks have also not hidden their intentions of going to market to raise long term funds, both bond and equity to meet the GH¢400 million regulatory requirements. Indications are that some have begun contracting brokerage firms to act as sponsoring brokers for their intended d offer to raise funds to shore up their stated capital.

Many market watchers and analysts are of the view that majority of foreign banks are likely to meet the new capital requirement because of the strength of their parent companies. They are however skeptical about whether many local banks can meet the regulator’s requirement and worried that banks in Ghana could be taken over by foreign ones.

So far, only five banks have met the new capital requirement according to the Bank of Ghana. Though it did not provide names, this paper’s checks indicate that the banks are:Ecobank, GCB, Stanchart, Stanbic and Barclays Bank.

Banks such as FNB, FBN, Bank of Africa and Sahel Sahara have parent banks that are capable of injecting additional funds into their business.

Meanwhile, Access Bank is seeking to raise a total of GH¢450 million in both equity and debt to shore up its stated capital and boost its operations. This is however subject to approval by the shareholders at the company’s Extraordinary General Meeting scheduled to take place on12th December, 2017.

According to a circular, proceeds of the capital raising exercises are to help support the bank’s operations and meet the Bank of Ghana’s recapitalization directive.
It stated that Access Bank would be aiming at raising GH¢150 million under the bond programme that will subsequently be listed on the Ghana Fixed Income Market (GFIM) of the Ghana Stock Exchange (GSE).
The remaining GH¢300 million is to be raised through a rights issue and the proceeds will be used “to meet the new minimum capital set by the BoG.”

Access Bank Ghana, a subsidiary of Access Bank Plc in Nigeria, listed on the GSE in December 2016, after successfully raising some GH¢29 million through an initial public offer

 

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