The central bank is expected to issue a ‘No Objection’ shortly, to allow the merger of First Atlantic Bank and Energy Commercial Bank to be fast-tracked after the latter failed in its bid to raise GH¢340million on the local bourse to shore-up its stated capital.
“The proposed merger of First Atlantic Bank and Energy Commercial Bank is receiving the attention of the regulator and its ‘No Objection’ approval is expected shortly,” a source close to the deal told the B&FT.
Energy Commercial Bank, in the second half of this year, failed in its ambitious plan to raise GH¢340million via the capital market to push its stated capital to GH¢400million. This led it to commence talks with First Atlantic Bank on a possible merger.
With the two lenders having Nigerian ownerships, analysts believe the deal can easily be pushed through since they both undertake similar businesses with few branches across the country.
Even after a merger, the bigger entity will still be over GH¢170million shy of the required capital; but another source close to the deal noted that the banks are in talks with private equity firms who are “excited about prospects of the combined entity”.
First Atlantic Bank earlier this year secured a significant capital injection from Advanced Finance and Investment Group (AFIG), a Mauritius-based investment bank with strategic focus on growth equity of profitable and growing companies in sub-Saharan Africa – particularly West and Central Africa.
The financial statement of Energy Commercial Bank shows that as at September 2018, its stated capital stood at GH¢60million while that of First Atlantic Bank stood at GH¢168,678,000 for the same period.
Energy Bank Ghana Limited was incorporated in 2009 as a private limited liability company. It presently operates 12 branches in Ghana – five in Accra, three in Kumasi and the rest in Tema, Takoradi and Tamale. First Atlantic Bank started operations in 2011. According to its third-quarter results, the bank posted a profit after tax of GH¢18.9million.
With less than 20 days to the deadline of December 31, activities have reached a frenzy as banks that are yet to meet the stated capital scramble for funds or partners. The central bank has stressed that it will not be moving or changing the deadline to accommodate banks which are yet to meet the deadline.
At its recent Monetary Policy Committee announcement, Governor of the Central Bank Dr. Ernest Addison said only 22 banks have met the capital and the BoG is still waiting for the rest to perform or face its wrath – which includes forced mergers or downgrading licences to finance houses or savings and loans companies.