Merger talks hit snag

…as shareholders of Ankobra West Rural Bank rescind decision

SHAREHOLDERS of the Ankobra West Rural Bank (AWRB) have rescinded their earlier decision to merge the bank with the Nzemanle Rural Bank, after they had given the Board of Directors the mandate to initiate merger talks.

A technical committee had recommended a merger of the two rural banks, with a combined entity to be named as Nzema Kotoko Rural Bank.

This was after the Bank of Ghana (BoG) had recommended that rural banks merge in order to raise an undisclosed stated capital which is required of the rural banks.

The total expenditure incurred by the two banks, during the attempted merger initiative, was not known, but the main consultancy cost was estimated at GH¢26,000, to be funded by DANIDA.

The decision by the shareholders of the AWRB to reject the proposed merger talks was when the Board Chairman of the Ankobra West Rural Bank, Mr. Mike Ezan, had read out both the advantages and disadvantages of the proposed merger.

The Board Chairman, in his speech, had told the shareholders that one of the disadvantages of the proposed merger talks was going to be in the form of redundancy exercise, where some of the staff may have to leave the bank.

Again, the exercise would also affect the image and credibility issues, and as such, the value status of shares would change.

Mr. Ezan had also told the shareholders that two shares held in the AWRB would be exchanged for one share in the proposed merger.

“This is a major disadvantage to shareholders of the Ankobra West Rural Bank, despite all the strong indications for a merger. I therefore, wish to ask all shareholders to reflect on all the advantages and disadvantages enumerated, before casting your vote, for or against the
merger.”

Nonetheless, when the merger was approved, according to the Board Chairman, there was going to be a strong vibrant bank, reduction in executive costs, gain competitive advantage, and above all, enhance profit and dividend payments.

But, as if by grand design, the shareholders, who weighed both the advantages and disadvantages of entering into the merger, finally voted resoundingly against the move by the Board to merge their bank with the Nzemanle Rural bank.

Their reason for voting against the proposed talk, according to them, was premised on the fact that the said stated capital, which the BoG had directed all rural banks to raise by going into mergers, had already been raised singlehandedly by their bank.

Therefore, they did not see the wisdom in entering into a merger, when the bank was already doing well.

A number of shareholders, who hold shares to the tune of GH¢40,087,269, voted against the move, whilst another number of shareholders, who also hold shares to the tune of ¢183,920, voted in favor of the merger, out of the total of ¢5,621,189 shareholders.

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