The government has injected GH¢800 million into the National Investment Bank (NIB) to help close the bank’s capital deficit and boost its operations to support the national industrialisation agenda.

The injection of funds, which is in the form of a bond issued to the bank earlier in August this year, is part of efforts to make the bank compliant with the Bank of Ghana’s (BoG’s) requirements on minimum stated capital for banks and also make it more competitive.

The Managing Director (MD) of the NIB, Mr Samuel Sarpong, told the Daily Graphic and the Graphic Business' specialised programme on banking and finance, Banking & More, yesterday that the amount was in the form of a 10-year bond that the government issued to the bank.

Mr Sarpong was the first MD of a bank to take his turn on the programme, which streams on Facebook and other digital channels of the Graphic Communications Group Ltd (GCGL).

He said the Board of Directors of the NIB was now in the process of converting the bond, which was issued at 19 per cent coupon (interest)?rate, into equity for the purposes of capitalisation.

“The initial money that has come in is in the form of a bond, but it is going to be converted into equity, and that is the process we are going through over the next two months,” he said on the programme.

Banking & More

An initiative of the Daily Graphic and the Graphic Business, Banking & More is a pre-recorded interview that is broadcast on YouTube and the Facebook page of the Daily Graphic at 9 a.m. every Monday.

The discussions are also available on www.graphic.com.gh and Graphic NewsPlus, the digital version of the newspapers of the GCGL.

It is a thought-leadership programme meant to shape policy and bridge the information gap in the banking and the financial sectors by getting key stakeholders to throw more light on issues of concern.

The interview with Mr Sarpong discussed the challenges facing the NIB, the status of ongoing reforms, his vision for the bank, among others.

Challenges

The NIB, which was established in 1963 to drive domestic industrialisation, has suffered significant turbulence over the past few years.

The bank has posted losses consistently in recent times and now has a capital deficit of GH¢2.2 billion, according to an assessment conducted on its capital position last year.

Mr Sarpong said the government, which is the majority shareholder, was concerned about the bank’s predicament and had set in motion a strategy to help revive it.

He added that key in the strategy was the recapitalisation of the bank to make it liquid, efficient and resilient to support businesses.

Beyond the capital injection, he said, the bank had also recovered about GH¢300 million of its funds that were locked up in some of the collapsed financial institutions, with plans underway to recover the remainder.

Impact

Mr Sarpong explained that the injection of fresh capital and the funds recovered from the collapsed financial institutions had already strengthened the bank’s balance sheet and improved its earnings.

Combined with other gains chalked up from the internal controls instituted from last year to this year, he said, the NIB had successfully reversed its liquidity position from a deficit to a surplus, something which he said was the result of the turnaround campaign currently underway.

He said staff morale had also gone up, following the implementation of policies that were found to be credible and relevant to the revival of the bank.

“Our staff are actually getting excited about the prospects of the bank and they are working hard to realise the dream. It may interest you to know that since I joined the bank in May 2019, deposits have actually gone up,” he said.

Consequently, he said, he was convinced that the bank was on its way to becoming the “premier development” bank that specialised in supporting industrial development.

Reforms

Mr Sarpong, who was part of the team that reformed the GCB Bank, said he was passionate about turning troubled institutions into profitable ventures to support national development.

He added that a far-reaching reform exercise was currently underway in the NIB to create the requisite structures needed to efficiently deploy the GH¢800 million capital and the recovered funds for growth and support to the economy.

He said the reform process involved the reconstitution of the board of directors, development of new policies, injection of additional hands to augment existing staff and the prioritisation of good corporate governance, ethics and professionalism to help make the bank resilient.

“The new board and the management have actually understood the issues; we have put in place solutions to stabilise the bank; we are managing the balance sheet well, cutting cost, going after those who owe the bank and putting in place good governance practices,” he said.