The Securities and Exchange Commission (SEC) has defended its rejection of an application filled by the Republic Bank asking for a waiver to be exempted from taking over HFC bank.

SEC has come under severe criticism especially from the Managing Director of HFC bank, Asare Akuffo over its rejection of the waiver.

But the HFC boss has questioned why SEC granted a similar request made by the Abraaj group in the Fanmilk Ghana –Abraaj deal and not done same with Republic bank.

But speaking for the first since it rejected the waiver the Director General of the Securities and Exchange Commission Adu Anane Antwi said the two deals are not the same.

"The issues are totally different. In the case of Abraaj, they did not directly purchase shares in Fanmilk Ghana. The ownership structure of Fanmilk never changed. Nobody acquired any interest in Fanmilk. Fanmilk shares and majority share are still held by the same Fanmilk international. Fanmilk international did not sell its shares to some other company as happened in HFC. If you go to the registrar of members or shareholders register, you will find that there has not been any change in shareholding structure of Fanmilk Ghana ltd. If you go to the depository you will not see any change in the list of the people holding shares in Fanmilk", he said.

Republic Bank Limited an independent Caribbean bank with a history that spans 176 years of service has been increasing its shares in HFC bank since 2012 when it made its first purchase.

Republic Bank purchased 8.79% shares in HFC Bank Ghana for an amount of $8 million in December, 2012.

The bank bought the stake when HFC floated 112,420,246 ordinary shares under a private placement.

Republic’s stake further increased to 32.02 percent after buying 23.23 percent additional shares which was previously held by Aureos Africa Fund LLC.

On Friday June 7, 2013 Republic bank acquired 68,854,703 ordinary shares of no par value in HFC Bank Ghana Limited from Aureos Africa Fund LLC at a price of GHS0.56 per share.

It further acquired 7.98 percent additional shares in 2013 from Union Bank of Nigeria which increased its shareholding in the bank to the current 40 percent.

The bank in line with the Securities and Exchanges Commission Code on Takeovers and Mergers in the second quarter of 2013 was required to make an offer to all shareholders of HFC Bank after it became the largest shareholder of the bank with 32 percent stake at the time.

Republic bank applied for a waiver from the Ghana Securities and Exchange Commission (SEC) for an exemption from the requirement to make a mandatory takeover offer for the remaining shares in HFC Bank.

Republic Bank in its application indicated that it had no intention of taking over HFC Bank, because it had not got a deeper understanding of the Ghanaian market.

SEC however rejected the application by Republic Bank to be exempted from taking over HFC Bank.

Director General of the Securities and Exchange Commission, Adu Anane Antwi explains further to Citi Business News why it rejected the deal.

‘The difference is that, in HFC it is the shareholding that changed. Their shareholding structure changed. Some company that had shares in HFC sold shares to Republic Bank. So the two transactions are not the same.”