Shareholders of Cal Bank Ghana Limited have authorised the Bank to increase its stated capital from GH¢100 million to GH¢350 million, through a transfer of GHC250 from the Bank’s income surplus account.
The move is in compliance with the Bank of Ghana’s directive to all banks in the country to increase their minimum stated capital to GH¢400 million by the end of December, 2018.
Speaking at the Bank’s 2017 Annual General Meeting (AGM) held in Accra on Thursday, Mr Paarock Vanpercy, the Chairman of the Board of Directors of CAL Bank, said of the three options given by the BoG to fulfill the requirement, the Bank had decided to go with the option of using its surplus income in order not to call on shareholders to put new money into the Bank.
He said the Bank expected to make up the shortfall of GH¢50 million in the course of the year through its operational results.
“We are pleased to inform you that all other things being equal, we are on course to meeting the GHC400 million minimum capital by the end of this year,” he said.
Following the decision, the Bank would not pay dividends to its shareholders for the year 2017 as it would reduce the funds available for capitalisation.
Instead, the Board proposed a bonus share issue where shareholders will receive one share for every seven shares held to compensate shareholders for not being paid a dividend.
He explained that the Bank would issue a total of about 78 million shares, valued at the time of the decision, at GH103 million (GHC1.36p per share), almost double the value of the last dividend paid to shareholders in 2015 of GHC53 million.
“Today our share price stands somewhere around GHC1.93 pesewas per share so in effect the value that will be given to shareholders as a result of this bonus issue will be GHC 153 million, compared to GHC53 million, which was cash paid out for the year 2015,” Mr Vanpercy said.
To support the capitalisation, the AGM also approved an increase of the Bank’s authorised share capital from one billion ordinary shares to two billion ordinary shares so that it would have enough unused shares for future issues.
Shareholders also voted unanimously to approve a buy-back of up to 15 per cent of the Bank’s own shares, following a capitalisation issue.
This is to protect shareholders’ value in the Bank, as the prices of the shares may go down after the capitalisation.
The Bank, in the 2017 financial year, posted a profit after tax of GHC145.2 million, while the Cal Group posted GHC152.9 million, which Mr Vanpercy said was due to an improved operating income of 25.9 per cent and a reduction in its operating costs by 30.5 per cent.
The assets of the Bank and the Group grew significantly, ending the year at GHC4.21 billion and GHC4.22 billion, a growth of 17 per cent and 16.7 per cent respectively.