By Elizabeth PUNSU, Wasa Akropong
Shareholders of Amenfiman Rural Bank PLC have given authorisation to the board of directors and management to undertake a non-renounceable right issue of shares.
The shareholders also supported the bank’s transitioning into a community bank as part of efforts to strengthen its capital base and position it for expanded operations under the new Bank of Ghana (BoG) Microfinance Regulatory framework.
The unanimous decision was made at the Bank’s first Extraordinary General Meeting of shareholders, held at Wasa Akropong in the Western Region.
Chief Executive Officer of Amenfiman Rural Bank PLC, Dr. Alex Asmah, in an exclusive interview with the B&FT explained that the rights issue will allow existing shareholders to purchase additional shares at a discounted rate, enabling them to consolidate their holdings while injecting fresh capital into the business.
He indicated that existing shareholders could buy up to half of their existing shares whereas new shareholders get theirs at the prevailing rate yet to be determined by management and Board of Directors.
“This will ensure that our existing shareholders deepen their stake in the Bank, even as we create room for new investors to come in at the prevailing market price,” he said.
According to Dr. Asmah, raising the capital comes at a critical time as the Bank transitions into a community bank effective March 31, a move he described as an opportunity to do more for customers and local economies.
“With an enhanced mandate, higher capital and strengthened governance systems, we can extend our services to areas where customers have consistently asked us to establish a presence,” he noted.
Dr. Asmah indicated that the enhanced mandate will enable the Bank to scale up financing for Micro, Small and Medium Enterprises (MSMEs), invest further in technology and improve customer service support systems.
He added that stronger capitalisation would also reinforce the Bank’s risk management platform, enabling it to prudently extend higher credit volumes under controlled conditions.
Board Chairman of the Bank, Prof. Lucas Damoah, said the approvals were necessitated by impending reforms within the Microfinance sector.
“Due to the microfinance reforms, certain key decisions must be taken, including a change of name. The regulator proposes to move all rural banks into community banks, and that requires shareholder approval,” he said.
He said shareholders were therefore asked to authorise the board to implement name change and to proceed with the modalities for the proposed rights issue.
Prof. Damoah emphasised that increasing the Bank’s capital adequacy is central to its long-term sustainability.
“In banking, capital adequacy is everything. The regulator measures the strength of Banks primarily on capital and liquidity. We want to take advantage of this opportunity to strengthen our capital base ahead of the new framework from the Bank of Ghana,” he said.
While details of the new regulatory framework have yet to be fully disclosed, he noted that one of the anticipated enhancements is the relaxation of geographical restrictions that currently limit the operations of rural banks.
He further argued that existing geographical restrictions have placed rural banks at a disadvantage, particularly when customers channel their business cash flows through commercial banks that do not finance their ventures.
“We should be able to support our customers wherever they operate. If they are trading in China, we should have the capacity to meet their trade requirements and pay their suppliers directly. The Bank that takes the risk to finance the business should not be deprived of the corresponding transactional flows,” Prof. Damoah reiterated.
Prof. Lucas Damoah, Board Chairman, addressing shareholders
Shareholders at the meeting
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