The chief executive officer at First National Bank Ghana talks to Jason Mitchell about the country’s growing investment banking sector and the impact of new capital regulations Richard Hudson Q: What has been the impact of new capital regulations on Ghana’s investment banks?
A: During the past two years, the investment banking sector has experienced positive growth owing to the new minimum capital requirement for banks of 400m cedis ($69m). This has led to some consolidation and better capitalised banks. According to the central bank, new deals contributed to a 16% growth in overall banking assets during 2019, most of which are investment banking transactions, primarily in the infrastructure space.
There has also been strong activity in capital markets and advisory as more companies are looking to tap into bonds and equities. A few successful deals include the yearly syndicated cocoa loan, Eurobonds, regular domestic bond transactions and Tema oil refinery bonds.
Recent merger and acquisition (M&A) activity includes deals in the banking and insurance sectors driven by the recapitalisation exercise in these sectors. Deal flow has largely involved domestic investment banking players such as Fidelity Bank, IC Securities, SAS Finance House and Databank Group, with a strong showing from international players with a banking presence in Ghana. These include the likes of Barclays (now Absa), Standard Chartered, Stanbic Bank, Ecobank, GCB Bank, Société Générale Ghana, RMB and lately First National Bank Ghana.
Q: How healthy is competition in the investment banking sector in the country?
A: The market is growing, with a diverse group of players. While there is competition, this is largely among existing players looking to grow their market share. Most of the foreign exchange loan transactions are dominated by the international banks with presence in Ghana, with little or no competition from the local banks. Currently, in M&A and capital markets advisory the international banks are leading these transactions. But the local banks are beginning to develop capabilities to lead these deals by partnering with these international houses.
Another recent positive development is that local banks and non-bank financial institutions now have the capacity to actively play bookrunning roles in the Eurobond and domestic bond issuance space on behalf of corporates and the government.
Q: Are you advising on many M&A deals?
A: We are currently working on a few deals within the M&A space, assisting companies looking to grow their business portfolio across their product value chain […]
