Government is considering moves for ADB to takeover the National Investment Bank (NIB). 

Joy Business understands that this is part of measures to help restructure NIB, which has been going through some challenges over the past years.

Persons with knowledge of the proposed transactions say even though there are other options, the move to let ADB takeover of NIB is a priority.

Why the takeover?

The decision for the takeover has been influenced by government’s resolve that it can no longer continue to advance financial support to NIB.

This is due to government’s own financial situation as the country undergoes a $3 billion programme with the International Monetary Fund for economic recovery.

Joy Business has learned that government is “looking this way” after several strategies to turn around NIB are not yielding the needed results.

Some persons with knowledge of the transaction have pointed out that ADB may also need financial support for a smooth takeover due to the current financial position of NIB.

Some financial observers have also argued that there are other proposals to sell NIB. This, they contend will give government some space to totally relinquish all responsibilities to the struggling lender.

However, indications are that the government is committed to allowing ADB to takeover NIB.

Opposition to NIB’s takeover

The moves to allow ADB to takeover NIB have not gone down with all the interested parties.

Some persons who are against the takeover have argued that the NIB has begun steps to rebuild the bank, adding that such steps are yielding positive results.

According to them, NIB has substantially increased its deposit over a short period.

In addition, they posited that the bank has taken measures to block revenue leakages.

They pointed out that NIB could fully recover with an injection of ¢2.2 billion capital into its operations.

“We think that NIB should be made to also borrow from private investors.  Government can even allow NIB to float shares to individuals and institutional investors to raise funds to recapitalise the bank”, an opposition to the takeover told Joy Business .

Shareholding of ADB and NIB

Based on documents seen by Joy Business, the Government of Ghana is said have more than 50% stake in the National Investment Bank.

It is followed by the Financial Trust Fund held by the Bank of Ghana with a little over 44%.

The remaining shares are held by some investors.

NIB is Ghana’s first development bank.

It was established in 1963 primarily to promote rapid industrialisation in all sectors of the Ghanaian economy.

To execute its mandate, the bank has undergone management, institutional, and financial restructuring.

This is to strengthen its status as a world-class bank focusing on development and commercial banking activities.

On the other hand, the shareholding of ADB is constituted as shown below.

1.      Financial Investment Trust -64.05%

2.      Government of Ghana – 21.50%

3.      Ghana Amalgamated Trust PLC- 11.26%

4.      Retail investors and ADB staff – 3.2%.

The bank successfully listed on the Ghana Stock Exchange (GSE) on December 20, 2016.

What are the industry experts saying?

Giving some advice, Finance Lecturer at the University of Ghana Business School, Professor Lord Mensah urged thw government to manage the situation very well to not to send panic signals to investors.

He added that ADB itself will need financial support to ensure a seamless takeover that will not negatively impact the books of the agric bank.

He argued that the exposure of the banks is worth assessing to properly know the future fortunes of the two banks on the economy.