Last week an article on the above topic written by Kofi Korsah-Nkansah made the rounds in three newspapers.
A well researched article on the topic would have greatly benefitted us readers, however, he chose to re-echo the debatable views expressed by the Ecobank boss at the 14th MTN Business World Breakfast meeting that big banks were in effect, the panacea for financing the economic agenda of Ghana and bringing an end to the woes of the country.
What the writer failed to realize was the Ecobank boss’s view sought in a way to justify the criticism leveled against Ecobank’s acquisition of Trust Bank. Two of the three big Nigerian banks cited in his speech are operating in Ghana and what has been their impact on the financing of “big ticket transactions “in Ghana? Research into which banks are financing the major sectors of the economy and the government’s development agenda would have been an eye opener for all of us including the writer, instead of blending the Ecobank boss’s words in his article as if they were his own.
Big foreign banks have their business interests which are not always in line with the development agenda of the government. What has been the impact of raising the minimum capital and the proliferation of big foreign banks on the Ghanaian economy? Do the unprecedented high levels of interest rates, depreciation of the local currency, shortage of foreign currency etc support the assertions he is making? Does the writer know about “syndication?” The myth of ‘too big to fail’ was disproved by the financial crises which hit the world economy in the not too distant past. Big is indeed not always beautiful.
By the way, who benefits from ‘the higher dividends to shareholders’ when there is a takeover by a ‘big foreign bank’? Is there not a case for building some strong private Ghanaian banks that could match other competitors seeking dominance in the sub regional market? There are policies which when implemented would ensure that the banking industry evolves towards consolidation, reduced costs of operations and lower lending rates, but that is a topic for later.
From this shaky foundation he jumped into the HFC/Republic Bank mandatory takeover matter and it became very clear that he was clueless about the issue he is supposed to be following. My limited research revealed the following interesting information:
GROSS DOMESTIC PRODUCT (GDP) USD BILLION
Year Ghana Trinidad
2010 25.98 20.8
2012 39.57 23.4
2014 47.93 24.64
GDP ANNUAL GROWTH RATE (%)
2010 4.1 0.2
2012 2.6 -0.1
2014 5.1 1.98
POPULATION IN 2013(MILN) 25.91 1.34
Source of Data – ieconomics.com
Given the statistics above it will be educative to analyze the sources of the profitability of this Caribbean bank which operates in 5 countries across that region.
Maybe the Bank of Ghana, the Ghana government and all of us will learn a lesson or two from how the government bailout of a bank belonging to a private institution, CL Financial Group, has become so profitable that they have ventured outside when growth is stagnated in their home region to seek ‘greener pastures’ in Ghana.
The writer asserts that Republic Bank has “in fact so far invested so much in HFC Bank” without stating how much. I have also checked from credible sources and found his information to be false. The amount Republic Bank has invested into the bank directly to date is USD7.72million. They were sold about 8% of shares directly by HFC. They have however been buying shares on the market from other shareholders and managed to reach 40% shareholding.
Mr. Korsah-Nkansah says he has checked his facts with ‘experts’ and found that Republic Bank has to date, followed due process. Is he aware that the Securities and Exchange Commission (SEC) is currently investigating some share transaction undertaken by Republic Bank? Does he already know the outcome of the SEC enquiry? Deliberately pushing false information is not the way to fulfill the crucial duty of informing Ghanaians on this very important issue.
I read the MD’s statement in the annual report of Republic for 2013 in which he stated that “their share of profits in HFC Bank (Ghana) Limited for two months of it being an associate of Republic Bank Limited amounted to USD10 million!” I again read from the Chairman’s statement that the oil output in Trinidad for 2013 averaged 80,737 barrels per day (bpd)! What is Ghana’s production bpd? I leave readers to draw their conclusions.
Kofi should admire first the Ghanaian investors and management who built the Bank from scratch since 1990 to become a respected and profitable financial institution, and not ascribe the Bank’s profitability to a foreign bank which is yet to cut its teeth in Ghana.
I am surprised Mr. Korsah-Nkansah is not ashamed to refer to Nigeria in his piece. Unlike Ghanaians like him, Nigerians are proud of what is theirs. They do not suffer from our kind of inferiority complex that make us believe that despite having our own GCB Bank, HFC Bank, CAL Bank and reputable foreign banks like Stanchart, Barclays, SG Bank etc, it is a bank from Trinidad that is now coming to finance infrastructure, offer low interest rates, create mortgages, train bankers and pay dividend to SSNIT that will ensure that Ghanaians receive living wages and pensions. What a shame!
Mr Korsah-Nkansah concludes his article by saying that “by the way who said Republic Bank is a foreign Bank? They are the children (and therefore our relatives) coming back home and bringing value.” In his ignorance he did not research into the demographic composition of the peoples in the Caribbean. Is he saying that because of the face of the Republic Bank representative in Ghana? That is homework worth undertaking. Is he aware that some Ghanaians married to Trinidadians are being deported to Ghana? Who said Trinidadians see themselves as our “relatives”?
The more such slanted and misinformed articles appear in our newspapers, the more cynical Ghanaians become. If people such as Mr Korsah-Nkansah who have the unique opportunity to educate themselves and the Ghanaian public cannot analyze and argue dispassionately and honestly, then we are in big trouble!