Gov’t Injects Fresh Capital into Banks as Bond-Sale Plan Flops

Ghana has pumped 800 million cedis ($150 million) into a special purpose vehicle created to bail out banks that don’t have enough capital, according to four people with knowledge of the matter.

Ghana Amalgamated Trust, or GAT, will be getting the funds from the finance ministry after dropping a plan to raise the money through a bond sale, said the people, asking not to be identified because the details aren’t public.

The 2 billion-cedis debt issuance was abandoned after a court case challenging the legality of it soured investment appetite for the securities, they said.

The vehicle was formed in January to boost the capital base of five local lenders that weren’t shut down as part of the regulator’s efforts to clean up the industry, because they were deemed well-managed.

After GAT announced a roadshow to market the debt, an opposition lawmaker went to court in March to stop the process, saying using debt proceeds to buy shares in the companies would breach banking laws. The matter hasn’t yet been heard in court.