Government considers plan to allow ADB takeover NIB - Report

Government is reported to be considering plans which will see the Agricultural Development Bank (ADB) takeover the operations of the National Investment Bank (NIB).

According to a Joy Business report, the decision is on the back of moves to restructure the state-owned NIB which has been faced with an array of challenges in the last few years as government can longer continue to advance financing support to the Bank.

The portal added that people with knowledge of the proposed takeover hinted that although government is mulling over other options, the decision to allow ADB to takeover NIB is the likeliest priority option at the moment.

The move by government also comes on the back of hints given by the Central Bank Governor, Dr Ernest Addison who earlier in July this year said talks were in place to assess NIB’s viability.

Addressing journalists at the 113th MPC press briefing on July 24, the BoG Governor said issues regarding NIB and other under-capitalised institutions now form part of a financial sector strategy under Ghana’s current IMF-supported programme.

“The NIB is one of the banks that we will make that assessment on, to ascertain whether it is still viable or not. If it is viable and the government can find money to recapitalise it, then Yes. But if it is not viable, then, obviously, we will have to find a different use for that instrument,” Dr Addison earlier said.

“These are ongoing discussions between us and the international partners and I believe that in the next year [2024] or so, we will get a clearer sense of how to handle those particular institutions that are very weak,” he added.

Under Ghana’s 17th IMF programme, the Central Bank has committed to addressing the insolvency of under-capitalised institutions including the NIB.

The move also forms part of efforts to tackle the long-standing under-capitalisation of several special deposit-taking institutions (SDIs) following the banking sector clean-up exercise.

Following the recapitalisation of some banks operating in the country in the wake of the banking sector clean-up exercise, state-owned National Investment Bank, which was on the brink of insolvency, did not undergo recapitalisation.

ADB’s financial strength for NIB takeover

According to Joy Business, people familiar with the takeover transactions have said that ADB would likely need financial support to allow for the smooth transition of NIB which is currently struggling financially.

Also, some financial market watchers have argued for government to take the option of completely selling NIB as they believe such a move will buy government some time to totally relinquish all responsibilities to NIB.

Although the talks are still taking place, some interested parties have not received the news well with regards to ADB taking over NIB.

Some parties who are opposed to the takeover have argued that NIB has commenced moves to rebuild the bank and therefore a decision to allow a takeover will be counterproductive.

According to the opposing parties, NIB has recently increased its deposit position substantially within a short period while taking measures to address revenue leakages.

They further argued that the state-owned bank could fully recover with a capital injection of GH¢2.2 billion to boost its operations.

“We think that NIB should be made to also borrow from private investors. Government can even allow NIB to float shares to individuals and institutional investors to raise funds to recapitalise the bank”, an opposition to the takeover is quoted Joy Business.

MA/NOQ

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