Restructuring NIB’s balance sheet won’t fix solvency challenges – Banking consultant cautions

Banking consultant, Dr. Richmond Atuahene, has cautioned against proposals for a restructuring of the balance sheet of the National Investment Bank (NIB).

NIB is facing significant financial challenges with liabilities exceeding GHS 2 billion.

The Minority in Parliament has strongly urged the government to undertake a significant restructuring of the ailing NIB in order to prevent the bank’s potential liquidation.

The caucus emphasizes that there is a viable alternative to the bank’s predicament, suggesting that the government restructure NIB’s balance sheet by converting all NIB debts owed to the government into equity.

But Dr. Atuahene argues that such a restructuring may have negative consequences for NIB’s future obligations.

Speaking to Citi Business News, the banking consultant suggested that a proper recapitalization is the only solution to address NIB’s financial difficulties.

“NIB doesn’t need equity so government cannot turn the unpaid loans into equity. NIB needs liquidity; it needs cash and not about restructuring the financial position. If you convert the unpaid loans into equity, that’s not cash injection. NIB is cash strapped. So, we need someone to bring in liquidity after clearing the bad debts so the bank can run.

Dr. Atuahene also kicked against the idea of merging NIB with ADB, stating that ADB lacks the operational and financial capacity for such a takeover.

“We should only make sure that, there is a proper cash injection from all the loans so the bank can come back. Looking at the current position of NIB for a takeover, it is not ADB because ADB doesn’t have the strength”, he added.

 

Source: Citi Business News