Mixed reactions meet ADB ‘takeover’

  • BoG reacts
  • GSE suspends trading of ADB shares
  • ADB confirms move but backs BOG
  • More acquisitions in the wind

The opinions of economic and banking analysts are divided over uniBank’s ‘takeover’ of the Agricultural Development Bank (ADB), while the Ghana Stock Exchange (GSE) on Wednesday suspended trading of ADB shares to “clarify news on a purported take-over of ADB”.

While one school of thought holds that pledging the shares, proceeds, entitlement and voting rights of Belstar Capital, Starmount Development Company Limited, EDC Investments Limited and SIC-FSL to uniBank [pledgee] doesn’t not make uniBank owner of the assets [shares], others have applauded the move as essential in creating larger, indigenous banks capable of undertaking big-ticket transactions.

Dr. Charles Mensah of the Institute of Economic Affairs (IEA) noted that: “I didn’t think it was going to happen. uniBank itself was going through a lot. The deal can best be described as a frog swallowing a chicken. I thought the proposed merger of NIB and ADB made sense because NIB is dying.

“Size is important in banking, and ADB has about 42 branches. The thinking behind this was if uniBank could get it, it would increase its muscle and stature. Otherwise, uniBank doesn’t need it; it can grow on its own,” he added.

Dr. Lord Mensah at the University of Ghana believes the deal will create a stronger indigenous bank, liquid enough to compete against large foreign banks in the country. “It does not come as a surprise to me, because there are so many banks in the country that are not liquid and banking is about liquidity. After the universal banking law, all these banks are operating as normal commercial banks without specialisation.”

He added: “If you look at ADB’s loan portfolio, you cannot see the difference between what they lend to the agric, manufacturing and services sectors. ADB, as it stands, was struggling on its balance sheet. We are going to see a lot of these mergers and acquisitions [going forward], for which the system will be sanitised by removing banks that are not active. So, it is not surprising – and I think uniBank is equally good to manage ADB”.

BoG reacts

Central bank Governor, Dr. Ernest Addison, speaking at the opening of the new head office complex of Ecobank said the central bank has not given its approval to the deal.

“The Bank of Ghana has not given approval to the purported takeover or sanctioned pledging shares of the ADB to uniBank,” he said.

Dr. Adu Anane Antwi, securities industry expert and former Director-General of the Securities and Exchange Commission, told the B&FT that: “With the pledging of securities, the pledgee [uniBank] doesn’t become owner of the assets [shares].”

UniBank defends stance

Kwabena Duffuor II, Chief Executive Officer of uniBank, confirmed that: “The proceeds and entitlement attached to the shares include, but is not limited to, the voting rights at any general or extraordinary meetings and any future dividends that may accrue to those shares.

“Down the line, we might decide to do a proper transfer whereby we will need approval from the various regulatory bodies; but for now, we have the power and control over ADB,” he added.

Executive Director of uniBank Clifford Mettle also affirmed the bank’s stance, saying:              “uniBank will be the majority shareholder of ADB. The structure will be for the majority shareholding to be in the name of uniBank. A lot of discussions have been going on for Belstar Capital to hand over its shares to ADB.

“For the ADB customer, nothing much will change. There will be more of a strategic alignment for now. We will engage the ADB management and other shareholders a lot more vigorously going forward. The customers of ADB will not move to uniBank for now. We will still pursue our agenda as uniBank, and ADB will also pursue its own agenda as ADB.”

What the rules say about takeovers

Mergers and acquisition in the country are governed by the Companies Act 1963; the Securities Industry Act 1993, as amended by the Securities Industry (Amendment) Act 2000; the SEC Regulations 2003; the Takeover and Mergers Code; and the Central Securities Depository Act 2007.

Indeed, the insurance, securities and banking sectors’ takeovers require regulatory consent as stipulated in the Insurance Act 2006 (Act 724), and the Banking Act 2004 (Act 673) as amended by the banking Act 2007 (Act 738).

The swift pledging of the four entities’ share to uniBank raised questions about the deal’s legality. but uniBank says it has not contravened any regulations.

“Despite the pledge of shares and voting rights, it does not constitute an outright sale and therefore does not contravene any rules and regulations of industry regulators, including the Securities and Exchange Commission (SEC), Bank of Ghana (BoG) and Ghana Stock Exchange (GSE).

“Also, the only way uniBank can trigger an outright purchase of these shares is if the financial consortium, including Belstar, goes against any of the agreements signed. But even then, regulatory approvals from the BoG, SEC and GSE are needed for such deals to go through, because ADB is a publicly-listed institution,” Dr. Duffuor II said.

GSE suspends trading of ADB shares

The Ghana Stock Exchange (GSE) on Wednesday March 7, 2018 issued a statement announcing suspension of trading ADB shares.

“With reference to Section 7 of the GSE Automated Trading Rules (ATS), the Managing Director of the Ghana Stock Exchange (GSE) – in consultation with the Chairman of the GSE Council – has suspended trading in the shares of ADB effective March 7, 2018. This is to allow the GSE clarify news on a purported take-over of ADB.

“The investing public will be duly informed of the outcome and resumption of trading in the shares of ADB,” the GSE said.

ADB confirms but 

ADB has confirmed that it indeed received letters from Belstar Capital Limited, EDC Limited and Starmount Investment Limited pledging their various shares in the Agricultural Development Bank Limited to Unibank.

A press release issued by the bank Wednesday stated that: “It is the opinion of ADB that, a pledge does not have the effect of the transfer of ownership. Thus, if the shareholders mentioned herein have pledged their shares together with any benefits or privileges attached thereto that will not have the effect of making Unibank a shareholder of the Agricultural Development Bank Limited or constitute a takeover of the Bank.”

The release also stated that for a takeover to occur, it must meet the Banks and Specialised Deposit-Taking Institutions Act 2016 (Act 930).

ADB in its press release also quoted a statement made by the Governor of Bank of Ghana during the commissioning of the Ecobank Head office in Accra, on 7th March, 2018 in which he denounced as null and void the purported takeover of ADB.


The B&FT on Wednesday March 7, 2018 reported that a consortium of financial institutions which controlled majority shares in Agricultural Development Bank (ADB) had pledged their shares, proceeds, entitlement and voting rights to uniBank, a leading local bank.

Agricultural Development Bank (ADB) Limited, by its own mission, is a universal bank offering a full range of banking products and services in consumer, corporate, parastal, SME, agriculture, trade and e-banking services.

Its business focus is universal banking, with a developmental focus on agriculture and more. The bank successfully listed on the Ghana Stock Exchange (GSE) on December 20, 2016.

The consortium, led by Belstar Capital, also includes Belstar Capital, Starmount Development Company Limited, EDC Investments Limited and SIC-FSL.

These institutions took up a substantial stake in ADB’s Initial Public Offering (IPO) of 2016 that paved the way for the bank to go public.

ADB’s shareholding

Government of Ghana – 32.30%

Belstar Capital Limited- 24%,

Starmount Development Company Limited – 11%

SIC Financial Services – 10%

Bank of Ghana – 9.50%

EDC Investment Limited – 6%

Retail investors and ADB staff – 7.20%.

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