Standard Bank ready to re-capitalise Ghana unit

BLOOMBERG

Standard Bank Group Ltd, Africa’s biggest lender by assets, is ready to re-capitalise its Ghanaian unit after making provisions to cover more than half of its holdings in the nation’s debt.
“It may become necessary for us to inject capital in that business and we will, at the appropriate time,” Chief Executive Officer Sim Tshabalala said in an interview.
Banks in Ghana are staring at losses after President Nana Akufo-Addo’s government restructured 83 billion cedis ($6.8 billion) of local debt as part of a move to finalise a $3 billion bailout from the International Monetary Fund. Standard Bank joined FirstRand Ltd in accounting for the impairment. Ghana has an estimated 576 billion cedis of public debt.
Standard Bank said it had set aside 1.5 billion rand ($81 million) to cover potential losses arising from the West African nation’s loan-restructuring program. The bank said its total holdings of both domestic and onshore dollar-denominated bonds is about 2.6 billion rand. “We believe that the pain that we have taken in Ghana is exquisite,” Tshabalala said. “The numbers are very large, but we have a portfolio, and the portfolio is calculated to do that. Notwithstanding the impact of Ghana, our Africa regions business performed very well.”
According to Tshabalala, the government of Ghana has been “textbook” in their approach to the restructuring, extracting the appropriate bargain from all stakeholders. “They’ve been very tough in the negotiation process, as you can expect, because they have a public policy role to play,” the CEO said. The government has “extracted what they consider to be the appropriate bargain, which while appropriate from a policymaker and a government point of view, it’s been painful for holders of that debt.”