SSNIT awaits regulatory approvals for Merchant Bank sale to FirstRand
The Social Security and National Insurance Trust (SSNIT) is awaiting regulatory approvals from the Bank of Ghana and the South Africa Reserve Bank to consummate the sale of part of its stake in Merchant Bank of Ghana (MBG).
SSNIT is offloading 75 per cent of its stake to FirstRand of South Africa while maintaining 23 per cent in Merchant Bank and SIC Life maintaining 2 per cent of its original 15 per cent holding.
FirstRand, which is the second biggest bank in South Africa submitted the best proposal to beat Energy Bank and Fidelity Bank – both banks in Ghana. The deal when consummated will take the competition in the banking sector to a higher level.
In an interview with the Daily Graphic about the sale, the Director General of SSNIT, Dr Frank Odoom, did not mention the price for the sale of the majority stake in Merbank but sources close to the deal intimated the price to be more than GH¢170 million.
He said “Merchant Bank has put up a notice to that effect and we are still waiting for some regulatory approvals from the Bank of Ghana and the South Africa Reserve Bank.” He added that “these are approvals that should be obtained to consummate the deal”.
On the rationale behind the sale, Dr Odoom said Merchant Bank has been struggling over the past few years “and things were not as good as they should be. The shareholders were not getting the returns that they desired hence the need to infuse into the bank new and experienced strategic partners to shape the future of the bank”.
The SSNIT Director General maintained that the rationale for the sale of the stake in the bank is a pure business decision predicated on the desire of SSNIT to improve on its returns on investment to protect contributors’ funds in the wake of the challenges emanating from the pension reforms.
On perceptions regarding transparency of the deal, Dr Odoom said “FirstRand won the bid on merit because bid submitted were analysed by independent transaction advisors. The proposals were rigorously analysed on several quantitative and qualitative parameters and FirstRand proposal was adjudged superior to all the others”.
Shareholders after several consultations, he said, also approved the FirstRand proposal “because they were all convinced that the deal would serve their best interest and they have confidence that when finally consummated they will have better returns on investment.
“FirstRand is the second biggest bank in South Africa and has a big Balance Sheet and is noted for acquiring controlling interest in banks in the sub region and many other African countries”, he said.
Dr Odoom was confident that Merchant Bank will within a short time develop the muscle to compete with the “Big” banks in the country
Meanwhile, Daily Graphic investigations have revealed that following the announcement, there is some uneasy calm presently at Merchant Bank because some employees fear losing their jobs.
But Dr Odoom gave the assurance that there is no cause for alarm, saying “they should have no fears because occupational dislocation is not envisaged as a direct consequence of this deal”.
“It should be expected, however, that in acquisitions of this nature some structural changes to the organisation is inevitable, all with the objective of ensuring efficiency and effectiveness in operations and management, delivery of quality service to clients and stakeholders, improved product and processes to achieve higher returns on investment to shareholders.
Source: Daily Graphic