Business News of 2014-07-09

Republic Bank still relentless

The Trinidad-based Republic Bank has expressed its commitment to reviewing what it describes “any attractive opportunity that meets its criteria” in its quest to own majority stake in a bank in Ghana.
Republic Bank, which now owns 40 per cent stake in HFC Bank in Ghana, has been making frantic attempts to up its ownership to 51 per cent in a move to help it have controlling powers over the Ghanaian bank, but its efforts are being thwarted by some legal issues regarding the processes.
In an exclusive interview with the GRAPHIC BUSINESS via email, the Group General Counsel/Corporate Secretary of Republic Bank, Ms Jacqueline Quamina, said “We entered Ghana with the hope of investing an amount that would give us 51 per cent of a bank and one in which we could make a contribution and continue if allowed by the required process”.
“We believe Ghana is a great country with many opportunities,” she added.
The reaction of the English-speaking Caribbean bank follows an Accra High Court’s (Commercial Diversion) action a couple of weeks ago which dismissed an application by Republic Bank, asking the court to set aside an application for the interim injunction brought against it by HFC Bank.
HFC Bank, in its earlier application, contended that Republic Bank has not followed due process in its bid to take over the bank. Consequently, HFC Bank wants the court to block the transaction, since it contends that Republic Bank has violated the law regarding takeovers.
In its reaction, Ms Quamina expressed the disappointment of the Republic Bank at the sudden turn of events but was quick to add that the turn of events “will not affect our relationship with HFC Bank”.
“We are still discussing our options,” she said, adding that “We believe we have acted properly and in accordance with the advice of our advisors and the laws of Ghana”.
As to whether the bank would abandon its pursuit of HFC to consider starting and growing organically a new bank in the country, she said “not at this time”.
From the court
According to Republic Bank, the HFC application, which alleges insider trading and seeks to challenge its mandatory takeover bid of the bank, lacks merit, as it violates Section 8(C) of the Securities Industry Act 199- which requires aggrieved parties in a takeover or merger deal to first turn to a securities market arbiter (the Securities and Exchange Commission- SEC) for redress before going to court- which HFC has failed to comply with.
However, the trial Judge, Justice George Koomson, ruled that the supposed arbiter, SEC, is also a party and a defendant in the suit- consequently making it unfair for HFC to appear before it and expect to get a fair hearing.
Citing a previous decision by the Supreme Court in a case between Boyefio vs NTHC, Justice Koomson ruled that where there was a substantial reason to sidestep an arbiter, and therefore the court had a duty to hear the case of an aggrieved party.
“The reason is that the plaintiff (HFC Bank) has a case against the second defendant (SEC), which is supposed to be the arbiter. So asking the plaintiff to go back to the second defendant, who is also a party in the suit, would amount to a travesty of justice.
“More so, HFC is alleging insider trading and SEC, in its view, has already dismissed that claim. The commission has investigated an aspect of the case- insider trading, and according to SEC, no insider trading has occurred.
Meanwhile, the plaintiff is alleging that there has been an insider trading, so it will not be fair for the court to direct the plaintiff to go back to the commission on the same matter.
“So the plaintiff has given reasonable and substantial evidence as to why it will not go to SEC,” Justice Koomson explained.
Background to entry
Republic Bank first purchased 8.79 per cent shares in HFC Bank Ghana for an amount of US$8 million in December 2012 after invitations from the commercial arm of the World Bank, the International Finance Corporation (IFC).
The bank bought the stake when HFC floated 112,420,246 ordinary shares under a private placement.
Republic Bank's stake further increased to 32.02 per cent after buying 23.23 per cent additional shares which were previously held by Aureos Africa Fund LLC.
On Friday, June 7, 2013, Republic Bank acquired 68,854,703 ordinary shares at no par value in HFC Bank Ghana Limited from Aureos Africa Fund LLC at a price of GH¢0.56 per share.
It further acquired 7.98 per cent additional shares in 2013 from Union Bank of Nigeria, increasing its shareholding in the bank to the current 40 per cent.
In November of 2012, Republic Bank Limited and HFC Bank (Ghana) agreed to the framework for the investment by Republic Bank in HFC Bank.
The agreement, signed on November 6, 2012, provided that Republic Bank would not increase its shareholding in HFC Bank beyond 40 per cent for a period of one year without the prior approval of its (HFC) board of directors. 96-republic-bank-still-relentless.