Bloomberg said four people with knowledge of the matter told them the Ghana Amalgamated Trust (GAT) will be receiving the funds from the Finance Ministry after dropping a plan to raise the money through a bond sale.
The people who asked to remain anonymous explained that the GHC2 billion debt issuance was abandoned after a court case challenging the legality of it soured investment appetite for the securities, they said.
The GAT was formed in January 2019 to help boost the capital base of five local banks that were not closed down as part of the regulator’s efforts to clean up the industry, because they were deemed well-managed.
Afterward the GAT announced a roadshow to market the debt. But an opposition Member of Parliament filed a suit in court in March to stop the process. The MP argued that using debt proceeds to buy shares in the banks would breach banking laws. The matter hasn’t yet been heard in court.
The Bank of Ghana started the sector clean-up in September 2017 as part of an effort to raise capital levels and improve governance in the industry. During this process banks in the country reduced from 34 to 24. The BoG said that in January, the government issued a total of about GHC12 billion in bonds to save some of the lenders.
The government structured the funding to GAT in the form of redeemable preference shares which are being held by state-owned National Trust Holding Co. as its nominee shareholder, according to the people.