Government injects GH¢800m into NIB to boost operations

Government has reportedly paid GH¢800 million into the National Investment Bank (NIB) to aid the financial institution close their capital deficit and boost operations.

Managing Director of the bank, Mr Samuel Sarpong disclosed to Graphic.com that the payments were made in a form of bonds early August.

He explained that government injected the funds to enable the National Investment Bank to be compliant with the Central Bank’s requirements on minimum stated capital for banking institutions.

Graphic reports that Mr. Sarpong made the assertion on Banking & More, a current affairs programme on banking on finance on August 31, 2020.

He said the Board of Directors of the NIB were now in the process of converting the bond, which was issued at 19 per cent coupon (interest)?rate, into equity for the purposes of capitalisation.

“The initial money that has come in is in the form of a bond, but it is going to be converted into equity, and that is the process we are going through over the next two months,” the NIB boss hinted.

Early last month, governor of the Bank of Ghana Dr. Ernest Addison disclosed that the central bank set an agenda to resolve the insolvent institutions to prevent spillovers to other institutions.

“The Bank of Ghana raised the minimum capital requirement for the banks to GH¢400 million from GH¢120 million by 31st December 2018. This was a key policy aimed at strengthening banks to become more resilient, as well as strengthen their capacity to lend to better support economic growth.

“At the end of the exercise in December 2018, the number of banks had reduced to twenty-three (23) either by shareholders raising capital, through mergers, by acquisition through other banks, or the Government-administered scheme called the Ghana Amalgamated Trust. The recapitalisation repositioned the banking sector and made it better capitalized, liquid, stronger, and more resilient,” Dr Addison noted.

Government decided to inject some funds to aid NIB as it is the majority stakeholder.

Since its inception in 1963 the National Investment bank has in the past couple of years been faced with financial constraints.

According to an assessment conducted on its capital position last year, the bank recorded a capital deficit of GH¢2.2 billion.

Mr Sarpong further noted that NIB has been able to recover about GH¢300 million of its funds which were locked up in some of the collapsed financial institutions, with plans underway to recover the remainder.