Ken Ofori Atta
Ken Ofori Atta

Mr. Ken Ofori- Atta, the Finance Minister, on Wednesday, urged Parliament to approve an amount of GHS800 million initial capitalisation of Ghana Amalgamated Trust (GAT) for its investment in the four participating banks, under the new structure and the Put Call Option Agreement (PCOA.)

The PCOA will replace the Sovereign Guarantee that was previously approved for the banks

PCOA is a legally binding contract where two parties buy the right to purchase or to sell an asset at some point in the future. The two parties have the right either to enforce or to let the option lapse.

Mr. Ofori-Atta presenting the 2020 budget and Economic Policies dubbed: “Nkoso and Nkabom Budget” said, the GAT was set up in December 2018 as an urgent policy response to help support five indigenous banks that were unable to raise equity to meet Bank of Ghana’s new mandatory minimum capital of GHS4OO million by 31st December 2018.

These banks are the Agricultural Development Bank (ADB), OmniBSIC, Prudential Bank, Universal Merchant Bank and National Investment Bank (NIB).

He said the process was, however, affected by a legal suit challenging the debt instrument to be issued by GAT for equity investment in the participating banks.

“In response, the legal advisors, Bank of Ghana, Securities and Exchange Commission, and the National Petroleum and Regulatory Authority (NPRA) advised among others the replacement of the original bond framework for GAT with a preference share framework for investors.”

Mr. Ofori-Atta said an initial bridge capitalisation of GHS800 million was done by Government to enable GAT invest in the first four banks.

It would require raising of an amount of up to GHS800 million from investors backed by a PCOA from Government to enable GAT proceed with the original structure as planned but via preference shares.

He said all the insolvent banks, whose licenses were revoked by BoG, were indigenous banks which had a contagious effect on the remaining indigenous banks; making it hard for them to raise additional capital.

“To ensure that indigenous sponsorship in the banking industry is protected, and over 5,400 directs jobs and 12,000 indirect jobs are kept, the Government set-up GAT and announced a major intervention to provide a sovereign guarantee of up to GHS2 billion to GAT as a backstop to encourage investors to support our local banks.”

Disclaimer: News Ghana is not responsible for the reportage or opinions of contributors published on the website.

Send your news stories to [email protected] and via WhatsApp on +1-508-812-0505 

Previous articleGhana Deposit Protection Scheme to commence in December
Next articleGUTA applauds govt for credit scheme for private enterprises
The Ghana news Agency (GNA) was established on March 5, 1957, i.e. on the eve of Ghana's independence and charged with the "dissemination of truthful unbiased news". It was the first news agency to be established in Sub-Saharan Africa. GNA was part of a comprehensive communication policy that sought to harness the information arm of the state to build a viable, united and cohesive nation-state. GNA has therefore been operating in the unique role of mobilizing the citizens for nation building, economic and social development, national unity and integration.

LEAVE A REPLY

Please enter your comment!
Please enter your name here