The Government’s decision to support five local solvent but undercapitalized banks through the Ghana Amalgamated Trust (GAT) suffered a setback on Wednesday as Parliament deferred the passage of a GHc2 billion cedis sovereign guarantee for use by the Trust.
After a debate on the Finance Committee report which recommended its approval by majority decision, the House did not have the required numbers by law to approve the guarantee.
The Minority in rejecting the deal said even though it was important to save the banks involved, the government’s approach was flawed.
The Bolga Central MP and Member of the Finance Committee of Parliament, Isaac Adongo, called on the minority to “reject this transaction” in the interest of the nation.
“Anybody who values net asset values as a basis of buying the business is only undervaluing the business in order to buy it cheap. Mr speaker, we cannot accept the looting of our own national assets.”
The Finance Minister, Ken Ofori-Atta, who was also in Parliament, defended the approach by the government.
He assured the Minority that the government was pursuing the protection of banks and the creation of “a strong banking framework for the country.”
“Through the GAT, Mr. Speaker, we will be able to give them the capital and the appropriate technology and appropriate leadership and governance to ensure they become the ADB and NIBs of old that we have always looked out for.”
The Ghana Amalgamated Trust, which is made up of some private pension funds in the country, is envisioned as support for five banks that could not meet the GHc400 million but were solvent.
The five banks are: ADB, NIB, merged Omni/Bank Sahel Sahara, Universal Merchant Bank, and Prudential Bank.
The government stressed that the banks in the arrangement must not consider the support they are receiving as a bailout programme.
Misgivings about GAT
The plan to use the pension funds has received some criticism from unions and observers.
President of NAGRAT, Angel Carbonu said his outfit will not allow the government to take over the scheme contributors fought hard to establish.
“Happily, next week all Public Sector Unions are holding a meeting to take a common decision to protect the funds of our workers. We would have to be very careful with the government’s unbridled interference in SSNIT over the years, using workers’ money to support dead projects and agenda that did not give any returns to workers”.
The Ghana Federation of Labour also said the move was dangerous and called for a rethink of such plans.
Its Deputy Secretary-General, Kenneth Koomson said “the trustees are given the right to take such decisions that will inure to the benefit of the fund owners and we expect that they will take the right decision, but it looks like there is a certain arrangement to present the GAT as a worthy investment arrangement and we think it is quite dangerous.”
(By: Duke Mensah Opoku)