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Wednesday, February 3, 2010

Uproar over NIB property sale


A move by the National Investment Bank (NIB) to sell off eight landed properties located at prime locations and 24 official vehicles has raised concerns from some staff and banking sector analysts as to what the rationale behind the sales could be. **

The landed properties consisting of story building suitable for offices in such prime locations as Tesano, East Legon, Labone, North Kaneshie, Odorkor Government Residential area, Kokomlemle and East Legon have all been offered on public tender, with bidders expected to drop in their bids before February 15, 2009.

The bank is also scheduled to open tenders for the company vehicles that includ bullion vans and other vehicles meant for official assignments tomorrow,* *Tuesday February 2, 2010.

To the disappointment of some staff of the bank, some of the properties on offer, houses certain departments of the bank, and the *Financial Intelligence (FI)* has been told, there is not yet a clear communication to staff as to which particular office these departments will be transferred to.

Whilst the bank’s Tesano property housed the General Services and Purchasing Department, the East Legon property used to be the bank’s only training centre.

In another twist, the new management of the bank under Dr Percival Alfred Kuranchie is reported to have halted branch expansion projects initiated by the previous administration.

New branch facilities at Dansoman and Tarkwa which were almost ready for occupation are said to have been sold off to competitors.

Displeased staffs confided in the *Financial Intelligence* that “these two locations are very strategic as they could attract several prime customers in view of the huge business growth potential of these areas.

*FI’s* checks revealed that HFC Bank would be the new occupiers of the Dansoman edifice.

Our sources at the bank further hinted that the bank was gearing up for a massive retrenchment exercise as a frantic attempt to cut down the bank’s operation cost. It has also been suggested that the bank could be exploiting ways of shoring up its liquid capital.

The measures, insiders believe, are all part of austerity measures being pursued by the bank’s management to scale up profitability and enhance liquidity.

In what the *FI* describes as extremists view, some informants held to the view that the new management could be exploiting ways of returning some of the landed properties to their original owners, who had sold them under distress, or had used them as collateral to obtain credit from the bank, but could not pay back such loans, causing the bank to confiscate them.

It is believed that some of these people who have found themselves in privileged positions now, having close relations in management will want to take advantage of current management and low prices on the mortgage market to get back their properties back at far cheaper rates, causing double jeopardy to the bank. Whilst some banking analysts believe the bank could be selling off these properties to improve upon liquidity ratios in line with demands by regulators of the banking sector, others noted that its was not timely. Bright Simons of IMANI Ghana observed that the economy in general and the mortgage industry has hit trough, a reason why most construction projects in the metropolis have slowed. “From this point in time, prices can only get better,” he said, adding that “it would not be prudent to sell a productive asset at this time.”

Even though he agreed that branch expansion is not a priority for banks at this point in time, he observed that owning a new branch at “growth pole” and peripheral areas such as Dansoman could be helpful.

He mentioned that most banks are for now concentrating on improving their efficiency ratios.

FI’s inquisitions about these happenings at the bank are yet to receive any response.

The bank has been at the centre of controversy since its former manager, Daniel Gyimah, was cited in a financial loss of $60 million to the bank last year. Mr. Gyimah was alleged to have unilaterally entered into an agreement with Eland International Ghana in which he used NIB as a guarantor by issuing 30 promissory notes valued at $60,000,000. The notes were to mature on January 29, 2009. * Eland International Ghana contacted IROKO Securities Company in London and discounted the $60,000,000 promissory notes to $45,000,000 cash, but after the date, the notes did not mature and there was still no payment to IROKO.

The bank has since stated that the fraud should have been easily detected by Iroko Company and the investors who purchased the promissory notes, for which reason the bank stated with all emphasis that it does not consider itself culpable or liable for any losses that any investor may incur under the promissory notes.*

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