If GCB Bank Limited succeeds in taking over NIB, it could create the biggest bank in the country in terms of the asset.
If the takeover happens, it could create the biggest bank in the country in terms of the asset.
If the deal is successful, GCB Bank will have the asset in excess of GH¢10 billion. This automatically means a much healthier balance sheet to fund big-ticket transactions.
According to Graphic Business, a source told them discussions have started at the boards level between the two banks.
“As we speak, GCB Bank is seriously considering a deal with NIB. I will even call it a takeover and there are indications that it can happen anytime soon,” the source said.
The source added that the discussions started upon request from the common shareholder of both banks; the government.
NIB is 100 percent state-owned. But the government together with other quasi-state institutions hold the majority stake of 52.5 percent in the GCB Bank.
Analysts say this will give way for an easy takeover of NIB by GCB. The deal will only need the blessing of SSNIT (the bank’s biggest shareholder) with a 29.89 per cent stake and the Ministry of Finance (MoF), which manages the government’s 21.36 per cent stake.
The source added that “It is actually because of the potential takeover that a substantive Managing Director for NIB has not been appointed. The idea is to merge NIB with GCB Bank so that NIB can become a department in charge of project financing, among others.”
After Ernest Marlie Agbesi resigned from NIB to manage GCB Bank in August 2016, John Kweku Asamoah has been the acting MD of NIB, pending a substantive appointment. Ernest Marlie Agbesi later resigned in June 2017.
What will be the outcome of a successful merger?
If this consummation is successful, the combined business could have on its payroll over 2,000 employees and about 250 branches and agency offices nationwide.
NIB would be saved from its underinvestment over the years due to GCB’s assets, equities and equivalents.
GCB has assets in excess of GH¢6 billion, equity of GH¢1.1 billion and cash and cash equivalents of GH¢1.2 billion (as of December 2016).
It will also help raise GCB’s assets to some GH¢10 billion.
This will position the bank in a place to compete with rival counterpart banks in neighbouring Nigeria, where similar mergers led to bigger banks accumulating excess capital and that prompted them to expand into the sub-region.
Apart from the GN Bank and UT Bank that operate in Liberia and Nigeria respectively, none of the 13 indigenous banks have operations outside the country.
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This will also reduce the number of banks in the country.
Analysts have often argued that Ghana with an annual gross domestic product (GDP) of close to $40 billion and a population of about 27 million people is small for the current 35 banks.
Ghana is usually compared to Nigeria and South Africa whose economies are estimated to be worth US$550 billion and US$400 billion respectively but have 25 and 20 banks.