Banks might be worse off under debt exchange programme – Alhassan Andani

A former President of the Ghana Association of Bankers, Alhassan Andani, has explained that banks are worse off under the domestic debt exchange programme.

According to him, banks made a significant profit in the previous year that will not be enjoyed due to the programme.

He, therefore, noted that the conditions the government has given to banks under the programme are not favourable enough to “cushion” them.

While lamenting the government’s inaction that has led to the current state of affairs, he said: “The banks were really doing very well, even as at the end of December 2022 and on their way to make some strong profit for last year.”

“The current deal might make a lot of banks worse off, rather than improve their situation,” he was quoted by myjoyonline.com

The government of Ghana and the Ghana Association of Banks announced that an agreement had been reached to make some amendments to the terms of the domestic debt exchange programme.

The amendment includes an agreement to pay a 5% coupon rate for each of the twelve new bonds, resulting in an effective coupon rate of 9%.

It also added “the removal or amendment of all clauses in the Exchange Memorandum that empower the Republic to at its sole discretion, vary the terms of the exchange.”

Meanwhile, the individual bondholders stated that “with the banks onboarding the Domestic Debt Exchange Programme, the government is set to reach its 80% target.”

“The development reaffirms the need for government to exclude individual Bondholders, including individuals and Collective Investment Schemes (CIS), who account for less than 11% of the eligible bonds. Unlike the banks and other institutions who are set to benefit from various regulatory incentives, Individual Bondholders have no fallback nor incentives and will be condemned to shackled penury,” parts of the statement read.

SSD/FNOQ