UT Bank Limited is to raise GH¢ 200 million through a Renounceable Rights Issue and Private Placement, to among other things bring the bank in line with applicable regulatory requirements and to improve liquidity.
Shareholders at the Bank’s Extraordinary General Meeting in Accra gave approval to the Board of Directors to undertake the Renounceable Rights Issue to be offered to the existing shareholders in proportion to the number of shares that they hold which shall be payable in full upon allotment.
Shareholders also agreed to amend Regulation 7 of the Bank’s regulations, increasing the Ordinary Shares with no par value to five billion (5,000,000,000).
In the event that existing shareholders do not exercise all their rights, shares shall be allotted to investors who have been identified by the Board and the management of the Bank after the completion of the Rights Issue through a Private Placement.
The Bank’s Board Chairman, Mr Joseph Nsonamoah explained that UTB has grown rapidly over the last six years and has been at the forefront of many developments in Ghana’s banking sector and “we want to remain in this pole position”.
“In light of the ongoing challenges, we need to raise a minimum of GH¢ 200million through this transaction to enable the Bank access trade lines with partner banks that have been restricted over the past year due to the losses we incurred in 2015; and allow the bank to complete key elements of our Medium Term Turnaround Plan covering the period 2015 – 2018,” he said.
Mr Nsonamoah added that the new capital injection would serve as additional long-term capital which would, in turn, give us the flexibility to restructure and refinance certain expensive liabilities, reduce the interest burden and enhance our net interest income margins.
The new capital is also expected to enhance the Bank’s balance sheet structure by increasing liquidity and investment assets as part of building a stronger, more stable Bank with consistently growing earnings as proposed in the Turnaround Plan.
CEO of UT Bank Limited, Mr Stephen Antwi- Asimeng said: “UT Bank Limited is poised to realize significant improvement in its performance with all the aforementioned measures in place. As an SME-centric bank, we are committed to meeting the needs of our shareholders, our valued customers and the general public”.
UT Bank has engaged IC Securities (Ghana) Limited as Lead Financial Advisor and Sponsoring Broker for the Transaction.
The new capital will enable the Bank complete the implementation of the Turnaround Plan.
The key elements of the Turnaround Plan include, reducing the cost of borrowings; enhancing technology backbone; and expanding delivery channels and agency network to increase deposit mobilisation, which saw the launch of an agency branch at Kissieman, Accra to meet the growing needs of customers in identified catchment areas along with the introduction of Direct Sales Agents to support the plan.
Other elements include enhancing risk management with adequate human and technological resources; and completing the human capital restructuring process that began with changes in senior management, a headcount reduction in March 2016 and an improved retention, training and recruiting programme going forward.