Ghana Amalgamated Trust; Support or Bail Out?
The Government of Ghana in an effort to support local banks in good standing to fall in-line with the Central Banks new minimum capital requirements has set up the Ghana Amalgamated Trust (GAT); is a Special Purpose Vehicle composed mainly of pension funds. Although the Central bank has stated categorically that local banks to be supported by the trust were selected solely based on their solvent status and good corporate governance; some industry analysts think otherwise. A school of thought holds the view that this arrangement clearly meets all the benchmarks of a government bailout although the Governor of the Bank has clearly refuted these claims.
The GAT ‘’comes in handy’’ especially with respect to the government banks as there were clear indications these banks needed to be propped to meet the new requirements set out by the regulator. It is not far-fetched to believe that government gave in to pressure not to merger The Agricultural Development Bank (ADB) and The National Investment Bank (NIB) as initially envisaged. The said merger would not have been politically expedient considering the potential job losses which would have occurred.
In my opinion, after all the dust settles, regardless of the form of assistance proffered by the Government of Ghana via the GAT, the assistance provides to the local banks will go a long way to help shore up investor confidence in the banking sector. This is critical as current investor sentiments in the industry are at an all-time low and the recovery of which will give some impetus to reinvigorate the ailing sector.