Graphic Business News

Omni, Sahel Sahara banks now Omni-BSIC Bank  • Searches for GH¢116m to meet BoG demand

By: Maxwell Akalaare Adombilla
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OMNI and Sahel Sahara banks have set in motion merger activities aimed at consolidating their operations into a bigger bank to be known as Omni-BSIC Bank Ghana Limited before the end of 2018.

A successful consummation of the deal is to help create a fairly bigger bank with a stated capital of GH¢284 million, assets of about GH¢1.2 billion in value and more than 610 permanent staff on its payroll.

Although a sizeable bank, the new entity will still be GH¢116 million short of the Bank of Ghana’s  (BoG’s) new capital demand of GH¢400 million by December 2018.

The Deputy Managing Director of the Sahel Sahara Bank, Dr Kojo Aboagye-Debrah, however, told the GRAPHIC BUSINESS on September 16 that the two sides were optimistic of consummating the deal, which includes recapitalising the new bank to GH¢400 million before the December deadline for the BoG to approve. 

 

How to recapitalise

Dr Aboagye-Debrah explained that when successfully consummated, the new bank would become a subsidiary of the BSIC Group in Libya and have about three minority shareholders, including the Jospong Group – the current owners of Omni Bank.

Although discussions are yet to be concluded, he said it was obvious that the BSIC Group would own between 30 and 35 per cent of the new entity, leaving the remainder 70 to 75 per cent to the Jospong Group and possibly, two other new investors.

He disclosed that there were indications that the Jospong Group would take some 30 per cent while the  yet-to-be named investors would be given the 25 per cent in return for extra capital of GH¢116 million needed to shore up the stated capital to GH¢400 million by   December.

 

New investors

Although Sahel Sahara Bank had about GH¢71 million in stated capital, Dr Aboagye-Debrah said the bank’s parent company, the BSIC Group, transferred some US$15 million into its stated capital account on September 13. This raised the stated capital to about GH¢143 million.

Together with Omni Bank’s current stated capital of GH¢141 million, it brings to GH¢284 million the stated capital of the soon-to-be unveiled Omni-BSIC Bank.

“Now the gap will be less than US$24 million and we have a lot of offers on the table from some investors that we think we can split and let them be on board,” he said.

He mentioned a bank in Francophone West Africa and two other institutions as some of the investors eager to fill the gap  in return for the 25 per cent.

“But if we are getting to around November and some of the due diligence are not finalised, then the existing shareholders will just put in the remaining capital for us to meet the GH¢400 million,” he said,  adding that such details would be determined in the final agreement.

 

Job losses

As a sign of commitment to actualise their merger intentions, the two banks have since signed a ‘heads of terms’ – a non-binding agreement – in which they have agreed that none of the permanent, contract and casual staff of both banks will be laid off over the next 36 months.

Dr Aboagye-Debrah explained that the decision to retain all staff after the merger was because “this one is not a forced marriage”.

“This one is an understanding between the two institutions that we want to have a full universal banking suite to be able to support the Ghanaian economy,” he told the paper on September 16.

While admitting that retaining all staff after the merger could undermine performance and balloon the new entity’s overheads, Dr Aboagye-Debrah said critical analyses of the operations of the two banks showed that all the current employees would be needed in the yet-to-be unveiled Omni-BSIC Bank.

He mentioned increased product innovation requiring more hands and a decision to keep all available branches after the merger as basis for the  staff retention. 

“We have 17 branches and they have 29 branches and that comes to 46. We think that 46 will be the optimum because in Ghana here, you do not need too many branches.

“Also, we have looked at their locations and we think that we will need to close any branch, at least for now. So we are saying that within the next 36 months, everybody’s job is secure,” he added.

The two banks currently have a permanent staff strength of 614. 

 

Political talk

In spite of the decision not to lay off staff, an investment banker and Chief Executive Officer of C-NERGY, Mr Michael Cobblah, said some disgruntled staff could exit after the merger.

“By virtue of the merger, some people may feel disgruntled, they may not wield the same power they used to have and so may fall out naturally because they think they have lost some steam,” he said.

Mr Cobblah, who led the team to integrate erstwhile The Trust Bank (TTB) into Ecobank Ghana, added that the plan to retain all staff was “a political one” meant to stabilise the bank.

He cited the Ecobank-TTB takeover in 2011, when some persons exited in the early days despite assurances by Ecobank that there would be no job losses in the first 48 months.