HFC Shareholders approve resolution to raise 30 million dollars

Accra, April 16, GNA - Shareholders of HFC Bank on Thursday approved a resolution authorizing the Board of Directors to raise 30 million dollars in ordinary shares from strategic investors, including the 10 largest shareholders, to enable the bank to meet the new minimum capital requirement of the Bank of Ghana.

The Bank of Ghana in February 2008 set the minimum capital requirement for obtaining universal banking licence at GH¢60 million. Existing banks are required to attain a minimum capitalization of GH¢ 60 million by December 31 2009. Ghanaian-owned banks have been given a longer time period to meet the new minimum capital requirement. Under the directive, banks with local majority share ownership will have to attain a capitalization of at least GH¢ 25 million by the end of 2010 and GH¢60 million by 2012.

But the approval of the resolution did not pass without a hot debate. The existing shareholders who were afraid that they could lose their hold on the bank in the event that the strategic investor taking up a controlling stake in the bank called for the amendment to the resolution.

They argued that instead of the board looking for strategic investors outside, the resolution be amended to include the 10 large existing shareholders of the bank. This was agreed and the resolution was passed. Speaking in an interview with the Ghana News Agency, Mr Asare Akufo, Managing Director of HFC bank said the capital was required to enable the bank to stand the stiff competition in the industry. The bank will also use part of the funds to complete its branch network roll-out programme and re-capitalise subsidiaries such as the HFC Investment Services Limited.

Mr Akufo said the Bank ruled out a rights issue because the current environment was not suitable for it, adding that, allowing the board to seek for investors gave much flexibility to explore all the different avenues.

He assured shareholders that their interest would be protected at all cost. Nana Agyei Duku, Board Chairman, said while the long-term growth prospects for the Ghanaian economy appeared to be favourable, recent developments in the global financial markets might impact on the near-term growth prospects.

This, he said, called for attention to the development of the domestic economy. In this direction the bank would focus on partnering with leading international financial institutions and organizations to strengthen its strategic business units. The group put up an impressive performance that saw interest income rising by 49.04 per cent last year from GHc27.94 million to GHc35.68 million. Profit before tax grew by 91.71 per cent to GH¢ 6.0 million from GH¢2.1 million. Loan and advances grew by 37.88 per cent from GHc102.63 million to GHc141.51 million. The bank declared a dividend of GH¢0.01 per share. 16 April 09