BoG ignored national interest, went against gov’t position in sale of ICB to Nigerian bank

Imani Ghana, the Ghana-based Think Tank of international repute, recently issued one of  its usual “alerts” on the sale of the International Commercial Bank (Ghana) Limited(ICB) to the First Bank of Nigeria(FBN) with the approval of the Bank of Ghana (BoG).

The thrust of the “Imani Alert” was whether or not any serious due diligence was conducted by BoG on the credentials of the Nigerian Bank (FBN) prior to the approval of the transaction against the backdrop of UK-based Financial Times’ 19th September, 2013 report that the FBN had allegedly been involved in “insider trading” in the acquisition of assets of Ecobank Transnational (ETI).

The alert also noted the terse nature of the official BoG statement which announced its approval of the sale and indicated that the said statement lacked certain essential details such as the sale price, disclosure of the evaluation process and its openness and whether or not there was “any competing interests except  to suggest that per the terms of the approval ‘the FBN is required to offload at least 40 percent of the shares to Ghanaians through private placement and/or the Ghana Stock Exchange of which at least 25  percent should be offloaded by 31st December, 2014 and the remainder not later than 31st December, 2016’

While conceding that FBN’s alleged involvement in “insider trading” as reported by the Financial Times” may seem unrelated to FBN’s involvement in ICB’s acquisition”, Imani nonetheless posed some important questions and demanded answers to them from the Regulatory Authority, the Bank of Ghana.

Among the eight questions posed were whether BoG was “aware of any competing local interests” and what had been ” the response to the Presidency that asked BoG to consider all local interests with respect to the ICB sale?”.

Information available to The New Crusading Guide indicates that there was indeed a “competing local interest” in the form of a proposal or an expression of interest from the Jospong Group of Companies to acquire International Commercial Bank Limited(ICB).

We have sighted a BoG letter dated April 23, 2013 addressed to the Group Chief Executive Officer of Jospong Group of Companies, acknowledging “receipt of your letter dated 5th April, 2013 and addressed to the Governor of the Bank of Ghana in which you expressed your interest in acquiring International Commercial Bank Limited (ICB) and requested our indicative approval”.

The BoG letter under reference, signed by Franklin Belnye, Head of Banking Supervision Department, informed the Jospong Group CEO that “the proposal for acquisition must jointly come from your  goodselves and International Commercial Bank (ICB)” in addition to the provision of certain documents among which were “due diligence report signed by the Managing Director of ICB and the Managing Director of Jospong Group of Companies; an extract of minutes of the general meeting of the shareholders of ICB and Jospong Group of Companies evidencing the resolutions to dispose/acquire the bank; a copy of resolutions of the board of directors of ICB and Jospong Group of Companies approving the proposed sale/acquisition; business plan including business continuity plan and IT Systems; legal due diligence covering all areas of any legal concerns that may face the resulting bank with specification on current litigations and anticipated litigation”.

Interestingly, in an earlier correspondence dated 15th March, 2013, the same Franklin Belnye had intimated to the Executive Chairman of the Jospong Group of Companies that “as a central bank we are supportive of Ghanaian content in the banking industry and encourage you to proceed with contacts with the owners of the bank towards acquiring the bank” adding that ” we have in a separate letter conveyed your intention to the bank with an advice that you be given fair hearing in the disposal process”.

These developments apparently encouraged the CEO of the Jospong Group of Companies to embark on a series of trips to Malaysia to negotiate with the owner and officials of ICB Financial Group Holdings A.G. on the possibility of acquiring the bank.

Records show that the Ghana High Commission in Kuala Lumpur, Malaysia, facilitated some of the interactions which appeared to have borne some positive fruits/results.

A 15th August, 2013 letter from the Ghana Mission signed by the Acting Head of the Mission, M.F. Inusah, revealed that Tun Daim(the owner of ICB) had “expressed his desire to sustain the good relations he developed with Ghana over the years and for that matter has no objection to divest the West Africa block of ICB to Jospong Group of Companies provided that the offer price remain the same”.

On 29th of August, 2013, the Chief of Staff  at the Presidency, Prosper D.K. Bani, wrote to the Governor of Bank of Ghana, Dr. Kofi Wampah, to the effect that “Government is committed to ensuring that the interests of Ghanaian companies are seriously considered in the acquisition of the International Commercial Bank(Ghana) Limited (ICB). The Bank of Ghana is therefore requested to be guided by this position in handling all transactions on the acquisition of the ICB”.

The efforts of the Ghana Mission in Kuala Lumpor and the letter of the Chief of Staff apparently had no effect on the powers-that-be at the Bank of Ghana as they took cover under the pretext that the owner of ICB, Tun Daim (Zainuddin) had earlier on 26th February, 2013, signed an agreement for the sale of all the ICB Banks in West Africa including Ghana, to the First Bank of Nigeria (FBN) and had subsequently in March, 2013, applied  to BoG as the regulatory authority for the statutory, requisite approval.

BoG insiders who spoke to this paper on condition of strict confidentiality, intimated that the powers-that-be at BoG appeared to be in no mood to facilitate the realization of a ” Ghanaian take-over” of ICB’s Ghanaian assets, and thus chose to “hide” under the cover of 26th February, 2013 sale and purchase agreement that Tun Daim had alluded to in his 17th July letter to the Governor of BoG, Dr. Wampah even though the said agreement was  then yet to receive the statutory approval of the Bank of Ghana.

” ….That by law, the Bank of Ghana has the responsibility for declining the sale and purchase agreement signed between the ICB and the current bidders (ICB) failure of which may result in the expiration of the agreement on 25th August, 2013″, underscored the Acting Head of the  Ghana Mission in Kuala Lumpor.

The whole drama took an intriguing turn when the CEO of Jospong Group of Companies, Mr. Joseph Siaw Agyepong, on 5th September,2013, received a letter dated 29th August, 2013, from Sashidharan Nair, Group Chief Executive Officer, ICB Financial Group Holdings A.G. apparently in response to a 27th August, 2013 letter Mr. Agyepong had written to ICB Financial Group Holdings, to the effect that “both ICB and FBN have agreed to extend the validity of the Share Purchase Agreement pending approval from the Bank of Ghana. We are unable to consider your interest in acquiring our bank”.

Subsequent to this development, the Bank of Ghana(BoG) quickly proceeded to give its statutory approval to the ICB/FBN deal thus effectively killing off the Ghanaian interest reflected in the interest shown by the Jospong Group of companies. Our BoG insiders believe that the Ghanaian Banking and Financial Sector is already “saturated” with too many Nigerian banking and financial institutions and that BoG should have exhibited a high degree of pragmatism, nationalism and flexibility as advocated by the Ghanaian government, and in the process help grow the Ghanaian interest and ownership in the nation’s banking sector as had been done in Malaysia, Singapore and even Nigeria.

Too much conservatism, lack of dynamism and the appropriate sense of nationalism as well as a streak of official arrogance and insensitivity; a combination of these negative characteristics can never grow the Ghanaian economy particularly the banking sector. And the earlier those entrusted with leadership and executive management postions of national importance, rise to the occasion and promote the larger national interest the better for mother Ghana, quipped our BoG insiders.

Meanwhile, snippets of information reaching us from Kuala Lumpor, Malaysia, indicate that some doubt has been cast over the source of authority of the 29th August, 2013 letter written by Sashidharan Nair, Group Chief Executive Officer of ICB Financial Group Holdings to Mr Joseph Agyepong and copied to the Governor and the First Deputy Governor of the Bank of Ghana.

Unconfirmed reports suggest that letter may have been issued unilaterially and without the requisite corporate consensus.