|
Listen now
|
Access Holdings a Nigerian lender may need to recapitalize its Ghana banking subsidiary after a massive write-down of its bond portfolio, following a sovereign debt default by the Ghanaian Government.
Access took an impairment charge of N103.10 billion in Full Year 2022, in recognition of the economic loss impact of Ghana sovereign debt crisis (Domestic debt and Eurobonds).
“They potentially need recapitalization of the Ghanaian subsidiary, given the loss of over N100bn may have notably eroded the capital of Access Bank Ghana,” a banking source told MoneyCentral.
“This is a subsidiary that was just recapitalised like most other Ghanaian banks about four years ago following the 2018/19 Ghanaian banking sector recapitalisation induced by the regulatory authority.”
On September 10, 2017, the Bank of Ghana (BoG) introduced the Internal Capital Adequacy Assessment Process (ICAAP) under the Basel II framework. The ICAAP required banks to more than treble their minimum capital to GHS400m ($91.6m) by December 31, 2018.
Access Holdings made a loss of N32.49 billion from its Ghana operations in 2022.
Whilst the economic loss on Ghana Domestic debt has been determined via a Domestic Debt Exchange Programme (DDE) with definite terms, unlike the DDE, the Ghanaian government has not yet presented restructuring terms for the Eurobonds.
The fair value for Ghana sovereign debts in the books of Access Holdings amounts to N348.15billion.
The Bank of Ghana last month instructed banks with capital adequacy ratio less than 10 per cent of their assets to submit recapitalisation plans.
Access Bank Ghana had total assets of N442.5 billion as at December 2022, financed by N33.83 billion of equity, data from its financials show.
Following the close of the financial year, Access Bank Ghana exchanged N153Bn (GHS 3.48Bn) of its existing domestic bonds for a series of new bonds with maturity dates commencing from 2027 to 2038 under the Ghanaian government’s Exchange Program.
The Central Securities Depository of Ghana allotted the new bonds on the 21st of February 2023.
“Though, restructuring parameters are subject to a lot of uncertainty, the possibility of further material impairment charge for this event is considered remote,” Access Bank said.