Business News Tue, 11 Dec 2018

Energy Bank, First Atlantic Bank merger needs additional investor - Consultant

A Banking Consultant, Dr. Richmond Atuahene has stated that the proposed merger between Energy Commercial Bank and First Atlantic Bank will require strategic investors to meet the 400 million cedis capital requirement before the deadline.

Describing the issue as crucial, he maintained that the two banks have little time to seek new investors hence must move quickly.

Banking Consultant, Dr. Richmond Atuahene was of the view that the banks must work quickly to get a third party to invest since time is running out.

“It is very crucial. Even if they come together, they may not meet the 400 million cedis requirement. From my calculations they won’t meet it. I am told is around 230, 240 million cedis. It will be left with about 160 million cedis,” he said.

He observed that the bank must move quickly to get an investor to inject the rest of the funds since it very important.

“Maybe when they come together and merged the stronger one would have looked for, [or] have a strategic partner sitting on the fence. So immediately they conclude this deal then the strategic partner can come in and add the difference to make the capital compliance”.

Two banks sign MoU

The two banks have begun merger talks in order to raise the 400 million cedis minimum capital requirement for banks. Citi Business News understands that a Memorandum of Understanding (MoU) has been signed awaiting further action from the two sides.

Per the MoU, Energy Commercial Bank and First Atlantic Bank will join forces and then look for an additional partner in order to meet the new capital levels.

This is because checks on their financial statements show that a merger of the two will still fall short of the 400 million cedis.

For instance, the financial statement of Energy Bank shows that as at September this year [2018], its stated capital stood at 60 million cedis while that of First Atlantic Bank stood at about GH¢168 million for the same period.

Granted the two banks merge, the stated capital level will reach GH¢228,678,000.

This will be about GH¢171 million shy of the 400 million cedis.

Energy Commercial bank’s Initial Public Offering (IPO) to help it meet the minimum capital requirement was unsuccessful as it could not meet the minimum amount of 68 million cedis.

Commercial banks have about thirteen [13] working days to meet the minimum capital requirement.

But considering the process of merger which should have the Bank of Ghana’s approval, it is unclear whether the banks will still be able to meet the mark.

Already, the central bank has insisted it will not extend the deadline despite earlier appeals to do so.

For now, twenty-two banks have met the minimum capital requirement of which two are mergers.

Source: citibusinessnews.com
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