The move also forms part of the means by the commercial banks to meet the new minimum capital requirement by the Bank of Ghana, by December 2018.
The Mergers and Acquisitions Directive by the BoG, comes barely two weeks after releasing the Capital Requirement Directive for banks.
The latter sets the requirement by which banks will calculate their level of capital ahead of the December 31 deadline.
But the Mergers and Acquisitions Directive broadly discusses relevant legal basis to consider a merger or acquisition, the specific requirements of the financial institutions in question and the possible sanctions for non-compliance.
The Bank of Ghana says the directive seeks to protect the interest of the financial institutions; depositors as well as secure the financial industry from any potential threat.
Again, the directive emphasizes the need for all decisions on proposed mergers and acquisitions to be submitted to the Bank of Ghana for consideration before any step could be taken.
But institutions must admit that the central bank could equally reject the acquisition of shares by a person who, in the bank’s opinion, would not be a fit and proper person.
Equally, post-approval could be annulled when the Bank of Ghana gets enough basis to dismiss its earlier decision.
Per the directive, the Bank of Ghana should within ten days reply with a formal letter of acknowledgment/letter of deficiency on proposals submitted to it, as the case may be.
However, as a financial institution, you should get a response from the regulator after six months of your submission granted all your documents are intact.
BoG sets ground rules for mergers & acquisitions
Banks seeking to acquire other banks or merging to become a bigger entity may start heaving a sigh of relief as the Bank of Ghana discloses guidelines to facilitate any such process.