BoG prepares to pull out from ADB

The Bank of Ghana (BoG) will soon pull out from the Agricultural Development Bank (ADB) as it cannot be a regulator and at the same time a player in the banking industry.

Economy Times has learnt that a committee made up of representatives from the Ministry of Finance and Economic Planning, (MOFEP), Bank of Ghana (BoG) and Agricultural Development Bank (ADB) are considering the various options to allow the BoG to offload its shares in ADB.

There are two options currently being considered, either a sale through a private placement or an initial public offer thus listing it on the stock market. Private placement or non-public offering is a funding round of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors.

But Economy Times checks reveal that it would be done through an initial public offer to allow every institution or individual a chance to buy into the bank, which when successful would be listed on the Ghana Stock Exchange (GSE).

The move forms part of efforts to recapitalize the bank to enable it play its role more effectively as a major financier of agricultural development projects as per the mandate that set it up as well as remain competitive among its peers in the highly competitive banking sector.

ADB’s history can be traced back to 1964, when Bank of Ghana set up as a Rural Credit Department to prepare the necessary legislation, plans and procedures for the establishment of a specialized bank for the provision and administration of credit and other banking facilities in the agricultural sector.

In 1965, Parliament passed The Agricultural Credit and Co-operative Bank Act, 1965 (Act 286) which incorporated a bank under that name. In 1967, National Liberation Council Decree (NLCD 182) was passed to change the name of the Bank to Agricultural Development Bank (ADB) and amended certain sections of the original Act to allow ADB to undertake the acceptance of deposits on current and savings accounts and transact banking business normally carried on by commercial banking institutions, including raising loans from foreign sources.

In 1970, The Agricultural Development Bank Act, 1970 (Act 352) was passed to broaden the Bank’s functions. ADB was granted a full banking license in that year under the Banking Act, 1970 (Act 339).

In 2004, ADB gained a Universal banking license under Banking Act 2004 (Act 673) which removed restrictions on banking activity. From its original Head Office on Tunisia Road, ADB moved to the Ring Road Central, then to the Cedi House on Liberia Road in 1993, before finally settling at its current ADB House Head Office premises on Independence Avenue in 2005.