Financial sector mergers in the wind

Although the central bank is yet to announce by how much it will increase stated minimum capital for banks, some players in the sector have said they are open to and have begun talks on mergers and acquisitions, in order to build stronger financial institutions.

Nii Kotei Dzani, President of Groupe Ideal, which includes a savings and loans company, a finance house and others, said the company is in talks with one or two banks for a takeover.

“We are ready to acquire a bank and transform it to meeting the expected increment in the stated minimum capital,” he said, adding that Groupe Ideal already has investors lined up and is putting a team together.

Mr. Dzani noted that once the acquisition is completed, moves will be tabled to merge the newly acquired bank with Groupe Ideal’s Firstrust Savings and Loans to become a much bigger banking entity, ready to rub shoulders with the international banks.

“The talk with the other bank has started and we should complete it within the next three to six months. We are talking to about one or two banks but we will end up with only one. The bank is a universal bank,” he said.

With fears that the expected increment in stated capital requirement will reduce the number of local banks in the country, Mr. Dzani noted that there are investors ready to acquire local and international banks to sustain and even increase the local content.

“If we acquire a local or foreign bank it definitely becomes local. If we do not buy the local banks a foreigner may end up buying it. If we even end up buying a foreign bank we end up increasing the local content,” he noted.

Emmanuel Adu-Sarkodee, Group CEO of CDH Holdings, also told the B&FT that the company is looking at getting into banking through a merger with an existing universal bank.

“Banks in the country are too small; we do not just want to convert our finance house or savings and loans into a bank. We think we should merge with somebody to create a much bigger portfolio for ourselves. We are in talks with many institutions. Currently, we are talking with three banks to see the prospects of merging with them,” he added.

Asked when an announcement should be expected, Mr. Adu-Sarkodee, noted that will depend on whether the talks are successful.“What we have to look at are our values and whether the fit will work. This is because sometimes, the financials fit but the human beings do not fit and without the human beings fitting there is no fitting,” he noted.

The Central Bank, since the third quarter of 2016, has served notice it will increase the stated minimum capital to, among other things, strengthen banks and guard against increasing risk and ability to absorb shock.

Some industry players have called for a massive spike in the capital requirement to more than GH¢500million or possibly GH¢1billion, to enable banks take on big ticket transactions and be able to hold their own internationally.