SSNIT Shocks FirstRand Bank Of South Africa ?Over Abrogation Of 75% Stake Bid

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The much trumpeted takeover bid of Merchant Bank Ghana Limited (MBG) by South Africa?s FirstRand Bank Limited has hit a snag, following the announcement by Social Security and National Insurance Trust (SSNIT), the majority shareholder of Merchant Bank that the $91 million offer could not go through.

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SSNIT, the state-owned pension giant, which owns 68 percent of MBG over the weekend, explained that the two parties, namely First Rand and Merchant Bank, failed to reach an agreement on the commercial principles for the acquisition.

The Corporate Affairs Director for SSNIT, ?Ms Evangeline Amegashie in a press release stated:?FirstRand Limited (FirstRand) of South Africa and Ghana?s Social Security and National Insurance Trust (SSNIT) jointly announced that the original legal and regulatory time frame agreed for FirstRand?s offer to acquire Merchant Bank Ghana (MBG), announced in August 2012, has officially lapsed?.

It went further to say that despite all reasonable endeavours, the parties were unable to reach an agreement on the commercial principles underlying the transaction and could not procure the fulfillment of all the conditions precedent. Therefore, the transaction cannot be completed and has lapsed.

However, SSNIT said it would initiate a new process to invite proposals from interested parties for the acquisition of MBG.

The released noted: ?FirstRand said that it was disappointed not to have concluded the transaction, however, Ghana remains a priority country for expansion and the Group would continue to engage with SSNIT on its new process?.
It could be recalled that in August, last year, FirstRand Bank of South Africa made a bid of $91 million for a 75 percent stake in the Ghanaian bank. The takeover, if completed, should have positioned the bank among the five largest in terms of assets in Ghana.

But the deal was put on hold due to difficulties among shareholders on clearing of outstanding bad debts on the books of Merchant Bank. The Business Chronicle learned that Merchant Bank last year, accepted a GH?176.4 million from FirstRand in exchange for 75 percent stake in merchant.

FirstRand?s bid comprised an acquisition of shares from existing shareholders for GH?140 million, and a subscription for new shares for GH?36 million.

Currently, Merchant Bank operates 22 branches across the country. Although many Ghanaians had have raised concerns over the deal, workers of the bank completely supported the takeover bid.

They were convinced that the First Rand Bank deal would help turn fortunes of the bank around and bring returns for shareholders.

Workers believe the injection of the much needed capital will re-position Merchant Bank with strong balance sheet required to support emerging economic opportunities.

However, the disgruntled Merchant Bank staff who petitioned Ghana?s government to authorise the acquisition of the cash-strapped firm to South Africa?s FirstRand Limited this year were completely at the sea when they heard the abrogation of the takeover news.

Reacting to the news, the never-give-up First Rand bank said the transaction was still in progress and rolling according to its timetable.

The immediate Director General of SSNIT, Dr. Frank Odoom under whose term the controversial deal began had told Citi FM, an Accra-based radio station that there was a clear-cut plan to retrieve the monies owed the bank.

Meanwhile, the Bank of Ghana (BoG) has assured that it has put in place measures to safeguard the operations of Merchant Bank and protect the interest of customers and all stakeholders.

This was after the regulator announced in a statement that it was unable to proceed with the approval of FirstRand Bank of South Africa plan to take over Merchant Bank Ghana.

The Central Bank added that it will provide liquidity support to MBG, if needed, to address any liquidity challenges it may face.

It will l also continue to monitor developments in Merchant Bank and the banking industry to ensure safety and soundness of banks.

The Bank of Ghana had earlier stated that, it was having difficulties in approving the deal, because of difficulties among shareholders on clearing Merchant Bank?s bad debts, which currently stand at almost, GH?200 million.

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