Ghana’s Parliament approves GH₵2 billion request to save five local banks

Parliament has approved up to GH₵2 billion for the Ghana Amalgamated Trust (GAT) Limited.
GAT is a special purpose vehicle with the support from the government.
It was incorporated in December 2018 to raise up to GH¢2 billion and invest in five indigenous banks and save them from collapsing.

Ghana’s legislature has approved the issuance of a Sovereign Guarantee of up to GH₵2 billion in favour of Ghana Amalgamated Trust (GAT) Limited.

GAT is a special purpose vehicle (SPV) with the support from the government, was incorporated in December 2018 to raise up to GH¢2 billion and invest in five indigenous banks.

This is to prevent the five local commercial banks that failed to meet the Bank of Ghana’s minimum capital requirement of GH¢400 million from collapsing.

The five banks are the state-owned ADB Bank and the National Investment Bank (NIB). The rest are Universal Merchant Bank (UMB), Prudential Bank and OmniBank, which is merging with Sahel Sahara Bank.

Parliament concluded the debate on the approval of the GHc2 billion last Wednesday but the approval was deferred because of a lack of a quorum.

The Majority Leader, Osei Kyei-Mensah-Bonsu, asked that the approval is suspended for the for lack of a quorum following the indication by the Minority Leader, Haruna Iddrisu, that the Minority side would not partake in a decision to approve the facility.

During the debate, the Majority and Minority sides disagreed on the objectives of the SPV as well as the commitment of the government to support local banks.

The Majority side argued that the government only wants to save the local banks to ensure the continuous participation of local banks in the country's banking sector.

The Majority legislators said it was crucial for Ghanaians "to begin to take charge of our destiny."

However, the Minority members were of the view that the solution to supporting local banks lay with the SPV as the country would not get value for money from it.

The Minority Members of Parliament wondered why the government would not capitalise the banks but was rather relying on another body to support the banks.

Meanwhile, the GAT has appointed Albert Essien, formerly of Ecobank and Eric Nana Otoo, formerly of Goldman Sachs, Mckinsey, and Duet as its Board Chairman and Managing Director (MD) respectively.