Nduom asks pension funds to invest in local banks

Dr. Papa Kwesi Nduom, President of Groupe Nduom

Pension funds should invest a portion of their funds in Ghanaian-owned banks in a bid to help those banks meet the GH¢400million minimum capital the central bank has imposed, Dr. Papa Kwesi Nduom, Board Chairman of GN Bank, has said.

“The monies pension funds have are our contributions, and so they should be among the first people wanting to put funds in the Ghanaian banks so they can become strengthened. That is why the pension funds were set up and reforms made,” he said.

Speaking at a press conference to assure the public of GN Bank’s ability to meet the stated capital, Dr. Nduom noted that if Ghana is going to see accelerated development it needs local banks.

“It is local banks that cater to the needs of the rural economy. GN Bank has been a leader in the national retail market with over 300 locations and presence in every region and in almost all districts. I wish to encourage Ghanaians to patronise our Ghanaian-owned banks. I am referring to individual, corporate-type companies; and there is one group I want to direct this to – the pension funds,” he said.

Pension funds are allowed by their regulator, the National Pensions Regulatory Authority (NPRA), to invest up to 10 percent of assets or funds under management as ordinary shares in a corporate institution.

Private pension funds reached GH¢8.3billion in value at the end of July, 2017 data from the NPRA shows. The amount comprises funds accrued in the temporary pensions fund account (TPFA) at the Bank of Ghana (BoG) and total assets under management (AUM) by licenced trustees.

From a modest sum of GH¢805.1million in 2012, tier-two and three contributions which are managed by private schemes rose to GH¢2.6billion in 2014 before closing last year at GH¢6.8billion. The increase from GH¢6.8billion in December 2016 to GH¢8.3billion in July this year represents a growth rate of 22.1 percent within the seven-month period, consistent with average annual growth.

With only a few months to the December 31 capital adequacy deadline, about 15 banks are in a frantic search for fresh capital.

But Dr. Nduom assured that his bank will raise the GH¢400million before the December deadline. He explained that on August 10, 2018, GN Bank submitted a road map to meeting the Bank of Ghana’s requirement for its review.

“If approved, the bank will meet or exceed the minimum capital requirement. The shareholders of the bank are still fundraising with the hope to get to a minimum of GH¢600million by December 31, 2018. We want to exceed the minimum so that in case of anything we will meet the minimum,” he said.

“We have continued to engage other banks with the hope that we can build an even bigger Ghanaian-led bank,” he said.

“In the past few days we are seeing depositors coming back to us and I am hoping that many more will do so; so that our bank can not only be technically liquid, but most importantly it will be a safe and sound place for people to keep their money.”