Shareholders of the Agricultural Development Bank (ADB) have given the management of the bank the green light to allow investments from the Ghana Amalgamated Trust (GAT) Plc to provide fresh capital to enable the bank to meet the Bank of Ghana’s (BoG’s) minimum capital requirement.

The ADB is one of five banks expected to go for capital from the GAT, which was set up by the government with funding from pension funds.

The shareholders also voted to enable the ADB to transfer GH¢127 million from the GAT as a private placement to meet the BoG's minimum capital requirement of GH¢400 million.

The move is also to strengthen the capital base of the bank to enable it to undertake increased business activities.

The approval was given yesterday at the 2018 Annual General Meeting (AGM) of the bank at the British Council Hall, where the shareholders were taken through how the bank fared in 2018 and steps being taken to ensure that it remained viable and vibrant.

At the meeting, the shareholders adopted the annual report, the audited financial statement for the year ended December 31, 2018, as well as the reports of the directors and auditors.

Other authorisations

The shareholders also waived the pre-emptive rights of shareholders in relation to the ordinary shares to be issued to the GAT in relation to the private placement.

This means that they have given the power to the directors of the bank to recalculate the shareholding with the new investors, which will dilute the stake of existing shareholders in the bank.

According to the 2018 annual report of the ADB, 60.5 per cent of the shares were held by the Financial Investment Trust (FIT), 32.3 per cent by the government, five per cent by ESOP, along with other minority shareholders, including staff of the bank.

The shareholders further authorised the directors of the bank, subject to applicable rules, to determine the terms, timing and pricing of the private placement.

Performance

The Chairman of the Board of Directors of the ADB, Mr Alex Bernasko, told the shareholders that the bank recorded profit before tax of GH¢34 million in 2018, representing a dip from the GH¢47 million achieved in 2017.

“Last year was particularly a year that held a lot of challenges for the bank, ranging from challenges in its shareholding structure to the effects of regulatory reforms,” he explained.

He was convinced that the strategies put in place had set the foundation for better performance, going forward.

Mr Bernasko, a former Secretary to the BoG, also explained that apart from the growth in shareholders’ funds from GH¢479 million in 2017 to GH¢639.7 million last year, due mainly to the injection of fresh capital, all the major indices remained flat.

“All other indices did not change significantly because of a deliberate policy to go slow and clean the bank’s balance sheet of historical toxic assets,” he explained.

Strategic plan

He gave an assurance that the board was committed to providing strategic direction for the bank to “aggressively grow its business in all operational areas within the framework of a five-year strategic plan”.

“The five-year strategic plan, spanning 2018-2022, which took off in earnest in June 2018 is gradually achieving its milestones, and with the additions to the management team, we are hopeful of attaining our objective,” Mr Bernasko said.

Challenges

The Managing Director of the bank, Dr John Mensah, admitted that 2018 was generally a challenging year, not only because of the BoG-inspired reforms in the banking industry and the introduction of new regulatory requirements but also because of the governance challenges the bank had to grapple with.

He, however, said the bank would continue to leverage its wide branch network, which engendered the necessary competitive advantage in the areas of visibility, extensive distribution channels, coupled with robust information technology infrastructure, agriculture-led diversified portfolio and quality customer service, to generate satisfactory returns for its major stakeholders.