The Bank of Ghana (BOG) has attributed delays in approving Merchant Bank’s sale to South African giant FirstRand, to difficulties among shareholders on clearing of outstanding bad debts on former’s books.
Ghana’s Central Bank is yet to approve FirstRand’s takeover several months after the South African bank submitted the necessary documents to secure the regulator’s go ahead for a takeover. This has even led to speculations that the deal would not be approved.
In August, last year, FirstRand made a bid of $91 million for a 75 percent stake in the Ghanaian bank. Ghana’s workers’ pension scheme SSNIT owns 68 percent of Merchant Bank and the deal, when completed, should place the bank among the country’s five largest in terms of assets. Merchant bank has 22 branches currently and the banks workers have openly supported the takeover.
However answering questions from journalists at the BOG’s Monetary Policy Committee meeting in Accra this afternoon, the Governor, Dr. Henry Wampah, said any approval would depend on agreement reached among stakeholders on the bad debt.
He said until the issues between the key stakeholders of the bank are resolved, the Central Bank can only watch closely.
Dr. Wampah allayed fears that the bank could collapse if the deal is not approved soon, saying Bank of Ghana would not allow that to happen.
Sources close to Merchant Bank have told journalists that the bank earlier this year submitted a comprehensive document on how it is recovering the bad debt.
Approval by Ghanaian authorities has taken longer than initially expected. The financial sector plays an important role in Ghana, where the economy expanded by 14 percent in 2011 and is expected to grow by 8 percent in 2013.
FirstRand is seeking to expand and grow its operations in West Africa and it hopes to use the acquisition of Merchant as its launch pad. South African banks have been spreading their wings across the African continent, hoping to tap into growth across the continent and also to offset dwindling fortunes in their home market of South Africa.