Wednesday, September 9, 2009

Government to give up stake in GCB

Rumors are rife in media circles about government’s intended decision to sell off a significant portion of its stake in the Ghana Commercial Bank (GCB), to raise badly needed revenue and to offer the bank full autonomy to run its operations.Government is expected to at least reduce its share holding from the current 2..% to aA Financial Intelligence source close to government relate that the issue has been topical within cabinet, and has come up for discussion at the Economic Advisory Council level.Even though the Finance Minister tells the FI there is no such intention, with Professor Kofi Afful, a member of the Economic Advisory Council denying any knowledge of this intent in an interview, evidence keeps mounting in support of the intended sale.Unusual price appreciations in the share price of the nation’s largest commercial bank on the Ghana Stock Exchange has raised eye brows that some insiders may be privy to some privileged information.From an all-year low of GH¢ 0.48, the price of GCB led a pack of recoveries in the past two weeks hitting GH¢ 0.82 before receding to GH¢ 0.81 at the close of trade last Friday. The stock has also been one of the most actively traded.There is also a corresponding attempt by government to clean up the debt sheet of the Tema Oil Refinery (TOR), and this is expected to be a move to free GCB’s loan portfolio of huge TOR debts to prepare the grounds for the intended offloading.As to the sale strategy, it has been speculated that government will trade off its stake in bits, in order not to violate the stipulation for the regulator’s approval before such trades in excess of 10% of total holdings are executed.It has also been said that government might off-load its stake to a strategic partner, a move that would require the bank to call for an extraordinary General Meeting before it is carried through.Should the intended offloading occur, many believe the bank could now be more profitable.Even though the bank is tauted as the country’s most widely networked bank with over 152 branches and agencies dotted all over the country, it has not returned much to its owners.Some industry experts however claim lending to government and governmental institutions has been one of the most secured investments for the bank since risk of default is low.Speculations are also rife that the unknown strategic investor could be using proxies in the current buy offs of GCB shares on the bourse.If this happens, the regulator could still find a lee way of reversing the trades if there is evidence of circumvention of any of the trading regulations.
Source:Financial Intelligence

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