Finance lecturer at the University for Professional Studies (UPSA), Dr Jabir Mohammed, has revealed that ADB bank may not having the financial capacity to take over the National Investment Bank (NIB), following government’s consideration of the move.

According to him, there is the need to find out whether the ADB has the key balance sheet and right profit margins to be able to takeover NIB. He equally stated that with ADB having so many branches across the country, he wonders whether it will be prudent to take on NIB as an addition.

Dr Mohammed stated that if ADB is doing very well and it requires additional assistance to do so, then it may be feasible. However, he expressed concern over the struggling nature of the bank following the banking crisis period, where most banks were supported by the Ghana Amalgamated Trust Fund.

“If we want to have a resilient banking sector, then we have to do the right things that will keep the banking sector in its proper form. So, ADB per se, may not have the right financial muscle in terms of balance sheet to be able to take on the NIB. If they do have that, then they can take it over, there’s nothing wrong with that – like the Ghana Commercial Bank took over the Trust Bank and the Premium Bank in 2017 – that can also happen.”
Dr Jabir Mohammed

Moreover, Dr Mohammed lamented what he described as the extensive political interference in the management affairs of these banks. He explained that with banks such as Ghana Commercial Bank and ADB listed on the Ghana Stock Exchange, there is the need to ascertain their performance, particularly with that of ADB by assessing progress of its shares and whether it is doing well enough to take over NIB.

“These are serious considerations that we should be looking at as a country.”
Dr Jabir Mohammed

Addressing challenges within NIB

Commenting on the reasons for the poor performance of NIB, Dr Mohammed stated that NIB as a financial institution is expected to be advancing some level of injection into the business environment. However, he noted that the bank is now having a serious trouble in the economy because the implementation of the DDEP programme, has occasioned a lot of banks struggling, and NIB is one of the banks that is not actually doing well.

“Pre-DDEP and Post-DDEP, we are still seeing that level of non-resilience on the part of the banks. I think that if your loans are not really performing very well, it means that you’re going to have a high level of non-performing loans, and that is going to be affecting your profitability level.
“I really think that this is one of the key troubles of the bank. As you are not performing well, we cannot keep on having you in the market – all the time government would have to come in to continue to support you in terms of liquidity. So, I basically think that there’s something really wrong with the bank that needs to be addressed.”
Dr Jabir Mohammed

To address the challenge with NIB, Dr Mohammed expressed the need for the National Development Bank to undertake a joint takeover with ADB. In this regard, he underscored that some of the clients of NIB can be posted to ADB so that they will maintain some sizable level of branches.

“I also think that we have the National Development Bank that was set up by the government and the aim is to extend [help]. So, the National Development Bank is of a similar business line with the NIB, why don’t the National Development Bank, that is supposed to be anchoring business models and investments in the country, takeover the NIB and spread their tentacles across the country.”
Dr Jabir Mohammed