The Bank of Ghana has revised the Merger and Acquisition Policy to prevent negative effects on competition and the stability of the financial system.
The guideline corresponds to Sections 54 (4) and 92 (1) of the Law on Banks and Specialized Depository Institutions of 2016 (Law 930) and was created in consultation with the banking industry and development partners, mainly of a technical nature, of the International Monetary Fund / AFRITAC West’s auxiliary missions 2.
It also aims to operationalize relevant sections of Law 930 relating to Mergers and Acquisitions by providing guidance on the processes and procedures for evaluating merger and acquisition requests and the required information, documents or agreements that the Bank of Ghana must be presented in the application process.
According to the central bank, this has been carefully considered in the light of feedback, comments and contributions received during the public consultation process.
It addresses key issues identified in the draft Mergers and Acquisitions Directive. The document therefore explains the major revisions that will be included in the final version of the directive, entitled Merger and Acquisition Directive 2021.
The directive originally cited as the 2018 Merger and Acquisition Directive is now cited as the 2021 Merger and Acquisition Directive to adequately reflect the year of issue to aid in referencing.
The scope of the Directive’s objectives is expanded to reflect the implementation of the relevant provisions of Law 930 on Mergers and Acquisitions.
Examination of applications for approval of company sales, mergers or conversions
The central bank said that a transaction involving a foreign bank cannot be approved unless the foreign bank’s home regulator states that it has no objection to the transaction.
Also, a proposed transaction that significantly reduces competition will not be approved unless the Bank of Ghana determines that the anticompetitive effects of the proposed transaction in the public interest are clearly outweighed by the likely impact of the transaction on convenience and needs to meet the community to be served.
For listed banks or SDIs, the banking sector regulator has determined that any person acquiring shares in a bank or specialist depository institution in connection with a takeover, merger or amalgamation of a bank or specialist depository institution must comply with the requirements of this policy prior to conducting a review and seek approval of the acquisition, merger or merger under the Securities Industry Act 2016 (Act 929).
General criteria for approving a merger / acquisition
The Bank of Ghana said it may approve a merger or acquisition if it is satisfied that a proposed merger or acquisition agreement will benefit the stability of the financial system as a whole, will not harm the interests of depositors and other creditors, among other things.
Approval by BoG
The central bank indicated that the application process should be three-tier, with two inherent approval stages of an application for a merger or acquisition by a bank or SDI.
These are pre-merger / acquisition approval, preliminary approval, and final approval.
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