BoG Annuls ADB Sale

The Bank of Ghana (BoG) yesterday annulled all shares acquired by Belstar Capital Limited (Belstar), Starmount Development Company Limited (Starmount), SIC-Financial Services Limited (SIC-FSL) and EDC Investments Limited (EDC) with regard to the Agricultural Development Bank Limited (adb) floatation.

The Central Bank has also prohibited the four institutions from exercising any of the voting rights or any other rights they hold in respect of the relevant shares.

The BoG also noted that the affected financial institutions were said not to have brought in any cash but rather relied on financial bailout given to uniBank by the Central Bank.

“The Bank of Ghana considers that Belstar and Starmount are not fit and proper persons and cannot permit them to continue to hold shares acquired directly or indirectly in ADB,” the BoG said in the statement.

The officials of the affected companies who were acting as directors on the board of ADB have also been relieved of their duties and prohibited from acting as such.

The decision by the BOG follows what it describes as deliberate plans hatched by the four financial institutions to acquire majority shares in ADB without the knowledge of the BoG.

The Central Bank, in a statement issued yesterday, accused Belstar and Starmount of having participated in a series of other questionable, unsafe, and unsound related party transactions involving uniBank Ghana Limited to the detriment of Ghana’s financial system and for their financial gains.

It indicated that it came to its attention that Belstar and Starmount are affiliates and unknown to the BoG, they entered into agreements with SIC-FSL and EDC to acquire additional shares in ADB in its Initial Public Offer (IPO).

It said these agreements, in addition to the direct acquisitions by Belstar and Starmount resulted in their direct and indirect holding in excess of 50% of the shares of adb without the knowledge and approval of the BoG, contrary to section 49 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

“It has also come to the notice of the Bank of Ghana that the shares acquired by Belstar and Starmount were acquired with funds obtained from uniBank Ghana Limited (currently in official administration) using emergency liquidity support obtained by uniBank Ghana Limited from the Bank of Ghana in questionable circumstances,” the statement said.

“The request for emergency liquidity support from the Bank of Ghana by uniBank, loans from uniBank to Belstar and Starmount, the loan from Belstar to SIC-FSL, provision of funds to, and the engagement of EDC by Starmount as purchaser and trustee of shares, are inextricably linked and manifest a calculated intention by these entities to act in concert to acquire a majority shareholding in ADB using EDC and SIC-FSL without the knowledge and approval of the Bank of Ghana,” statement said.

Pursuant to the illegal act on the parts of the financial institutions on the blind side of the BoG, the Central Bank has with immediate effect quashed the shares acquired by Belstar, Starmount, SIC-FSL, and EDC in the ADB and all transactions undertaken in respect of these shares.

Take Over

The financial sector was shocked in March this year when news broke that uniBank had taken over the operations of ADB.

Reports at the time had it that a consortium of financial institutions that controlled 51 percent shares in ADB reportedly willed their rights to uniBank.

But the BoG cancelled the said takeover before Unibank itself was taken over by the Central Bank due to management challenges.

However, ADB quickly denied the reports, saying it was erroneous since no such takeover had occurred.

Source: Daily Guide