In the debt exchange program, a call is made to the banks to support the government deal with its debts. Last week Ghana Association of Bankers( GAB) largely agreed to the new terms of the domestic debt exchange program mainly because there is a 5% coupon for 2023, removal of powers to vary terms unilaterally by the government and receiving clarity on the stability fund.
I do not hold investments in any bank. I do not hold any government of Ghana bond. I write this article because of the Ministry of Finance’s letter addressed to the Board Chairman of Ghana Amalgamated Trust PLC and dated January 2023. The letter directed the Board Chair to work with affected financial institutions and further asked that the financial institutions require their solvency support from the financial stability fund through the Ghana Amalgamated Trust PLC ( GAT).
The Bank of Ghana is the institution known to the law to provide liquidity and help banks manage these difficulties. The GAT is a stranger.
This is curious as the structure of GAT intends to take over or hold substantial equity in the banks. During the banking sector cleanup, GAT was used to make equity incursion into about five banks but these banks have not shown significant improvements and some of them have not published their accounts for five years. In some of the banks, there is a boardroom between directors representing GAT and those not representing GAT regarding strategies to take over the majority share. Extending GAT to other banks for access to liquidity support is dangerous. If that is the condition given, then by the time the debt exchange program is executed, ownership will change to GAT.
So what is the wisdom in the government introducing a debt exchange program which primarily means the government can not pay the debts and the program will disable the banks and government has to introduce an investment vehicle to own shares in the banks? As l said I have no investment in the banks nor holding any bonds but l see the introduction of GAT as a means to cripple and take over.
It is now time for directors and shareholders of banks to vote on the matter to fulfill corporate governance requirements. It is your bank, you may vote to reflect your interest.