Business News Wed, 20 Feb 2019

NIB can self-recapitalise, GAT irrelevant – Isaac Adongo

Member of Parliament for Bolgatanga Central, Isaac Adongo, has stated that the National Investment Bank has enough resources to recapitalise on its own.

He added that it was “dubious” to NIB in a list of banks that should be supported by the Ghana Amalgamated Trust (GAT).

He said “NIB does not need a pesewa from GAT,” alleging further that the GAT arrangement was irrelevant and a “clandestine move” to sell the state-owned bank to private investors.

In an expansive piece on the GAT, a copy of which is available to Ghanaweb, Isaac Adongo emphasised that any plan to recapitalize the bank must first look to the resources.

“If there are any shortfalls, you must first find a cheaper way to meet the gap. Any financial engineering that adds so much additional burden to the struggling company can only be attributable to incompetence or ulterior motive.

That is why the GAT arrangement with NIB is doubtful. It is meant to impose return on equity on NIB from day one. Clearly, this is a complex equity arrangement that looks more like a preference share transferring the expected coupon rate to NIB in guaranteed return,” he said.

The legislator said NIB will be capital-sufficient if it were allowed to sell its stake in Nestle Ghana and the government of Ghana and related parties also honoured their debt obligations to the bank.

He explained that a successful sale of NIB’s stake in Nestle Ghana and payment of government debt and that of quasi state agencies owed the bank will make it possible for NIB to recapitalise to GH555 million.

“Tell me why then has government abandoned this and rather endorsed a scam like GAT to ‘bail out NIB’ if the motive is not a clandestine one to take over the bank through a backdoor approach,” he asked.

He said the government of Ghana owns the bank GHC700 million and a sale of its Nestle Ghana stake would fetch GHC500 million.

“I have done a preliminary review of the financial statements of NIB for the period ended 31st December 2018 and realised that NIB, on its own, can fully recapitalise to GHC555 million if it is allowed to sell its stake in Nestle Ghana and the government of Ghana pays its GHC700 million to the bank. “At best, NIB does not need a pesewa from GAT not to talk of the GHC1.4 billion that the trust says NIB requires. My further analysis show that NIB, with appropriate decisions to restructure its balance sheet, with Government fully paying its exposure to NIB and its customers, the bank’s liquidity situation could be over GHC2.25 billion,” he said.

He thus wondered why “they trying to hang GHC1.4 billion on the neck of NIB whilst keeping the Nestle shares just to overburden the bank and take.

“This only goes to support my point that there is a clandestine attempt to take our bank,” he said.

He also said NIB recorded a GHC660 million negative income surplus not because it was a loss-making bank.

“The Bank has been making operating profits in the last three years".

“Unfortunately, Government has failed to pay its indebtedness to NIB and contractors who took monies from NIB. As a result, NIB has been compelled to write off or impair loans totalling about GHC700 million.

If Government were to pay its debts to NIB and its customers who took loans to work for Government, NIB will be over capitalised and over liquid.

Source: www.ghanaweb.com