There are reports suggesting that the government is contemplating a plan for the Agriculture Development Bank (ADB) to assume control of the National Investment Bank's (NIB) operations.

The decision stems from the need to restructure NIB, a state-owned institution that has faced numerous challenges in recent years.

The government is finding it increasingly difficult to provide financial support to NIB. Sources familiar with the proposed takeover indicate that while the government is exploring other options, allowing ADB to assume NIB's operations appears to be the most favored option at present.

This move by the government follows hints from the Central Bank Governor, Dr. Ernest Addison, who mentioned in July of this year that discussions were underway to assess the viability of NIB.

Dr. Addison made these comments during the 113th Monetary Policy Committee (MPC) press briefing, stating that issues related to NIB and other under-capitalized institutions are now part of Ghana's financial sector strategy under the current IMF-supported program.

“The NIB is one of the banks that we will make that assessment on, to ascertain whether it is still viable or not. If it is viable and the government can find money to recapitalise it, then Yes. But if it is not viable, then, obviously, we will have to find a different use for that instrument,” Dr Addison earlier said.

“These are ongoing discussions between us and the international partners and I believe that in the next year [2024] or so, we will get a clearer sense of how to handle those particular institutions that are very weak,” he added.

As part of Ghana's 17th IMF program, the Central Bank has pledged to resolve the solvency issues faced by under-capitalized institutions, including the National Investment Bank (NIB). This initiative is also a response to the persistent under-capitalization problem among various special deposit-taking institutions (SDIs) following the banking sector cleanup operation.

While some banks in the country underwent recapitalization in the aftermath of the banking sector cleanup, the state-owned National Investment Bank, which was on the verge of insolvency, did not participate in the recapitalization process.

ADB’s financial strength for NIB takeover

As reported by Joy Business, sources knowledgeable about the takeover negotiations have suggested that ADB may require financial assistance to facilitate a seamless transition of NIB, which is currently grappling with financial challenges.

Furthermore, some financial market observers have proposed that the government should consider fully privatizing NIB as this could provide the government with additional time to completely relinquish all responsibilities related to NIB.

While discussions are ongoing, certain stakeholders have expressed strong opposition to ADB taking over NIB. These dissenting parties contend that NIB has initiated efforts to revitalize the bank, making a takeover counterproductive.

They argue that NIB has significantly increased its deposit holdings within a short timeframe and has implemented measures to address revenue losses. They further assert that a capital injection of GH¢2.2 billion could enable the state-owned bank to fully recover and enhance its operations.

“We think that NIB should be made to also borrow from private investors. Government can even allow NIB to float shares to individuals and institutional investors to raise funds to recapitalise the bank”, an opposition to the takeover is quoted Joy Business.