ADB Board ‘snubs’ Rabobank & Stanbic proposal

The Board and Management of the Agricultural Development Bank (ADB) has submitted to the Finance ministry its official position and assessment of proposals made by Rabobank of Netherlands, Standard Bank of South Africa and the National farmers and fishermen award winners Association to acquire the Bank of Ghana’s 48% holding in the bank.

The ADB position which according to dailyEXPRESS sources was communicated to government last week, rejected the offers submitted by the two banks, but welcomed the proposal from the farmers and fishermen.

“The Board and Management found a degree of co-incidence with its position” it said in reference to the farmer’s proposal which included the floatation of the BoG shares on the Stock Exchange but “with some block shares reserved for farmers, fishermen, agricultural enterprises and the management and staff of ADB.”

The farmers and fishermen award winners who like Rabobank and Standard Bank met with and made presentations to the ADB Board and Management are proposing a share distribution that will have 50% of the BoG shares floated to individuals so as to deepen the capitalization base of the exchange and a minimum of 25% to be purchased by farmers and fishermen associations.

The association also proposed that a further 10% should be purchased by agric-related commercial entities such as Cocobod, Agricultural inputs supply companies and the rural banks through the Apex Bank; and 15% purchased by management and the staff of the Bank.

While the Bank’s official rejection of the Rabobank & Standard bank proposals is not surprising, the official position on the proposals to government represents the first and only official communication on the matter of the ADB sale.

All these while, it has been the senior staff of the bank who have been raising the red flags against the attempted sale. They have consistently received the backing of the Trades Union Congress, the Nkrumahist Convention Peoples’ Party and many other groups.

Government officials and spokespersons have in their submissions however re-emphasised a preference for the disposal of the BoG shares. What is not known is whether they will accede to selling the shares on the stock market as against disposing it off to a foreign entity like Rabobank or Standard bank.

The ADB Board and Management in their position paper to government and available to the dailyEXPRESS stated that Rabobank which was represented by its Managing Director Arnold Kuijpers wants to take a minority equity interest of up to 49% in ADB, with ADB becoming a partner Bank that will benefit from group expertise, network, products, etc.

Despite its minority equity interest, Rabobank wants to be enshrined with veto powers, to influence the future strategy of the bank and thus protect its investment, and will also nominate members of the management team to be appointed by the Board. They will also contribute specialised managers in senior management positions to help execute the chosen strategy of the bank.

The ADB board however stated to government that Rabobank’s “insistence on veto rights on the Board and nomination of Management team could limit the capacity of Government to push a development agenda which conflicts with the corporate direction of Rabobank.”

They noted further that Rabobank’s corporate focus on food and agri – business internationally, “relates largely to internationally traded food commodities and therefore the weather derivatives and price hedging instruments which they offer are structured for such agri-commodities.”

The ADB however recommends to government that the bank will be willing to engage them in technical exchange programmes at all levels “for mutual understanding of the different environments and also participate in joint financing of programmes and projects so that proper synergies can be developed.”

On the Standard Bank Group’s proposal, the ADB said to government that “any serious evaluation of the Standard Bank Group and its partner Banks in Africa and elsewhere points to them as commercial bankers with limited portfolio in agriculture.”

They made reference to a proposal for the establishment of an Agriculture Development Authority for agricultural financing, and says rather sarcastically that the recommendation “gives them out.”

It carried its rejection of the bank’s proposal further to its plans for management control stating among others that the Standard Bank’s “insistence in gaining controlling shares or management rights is a strategic move which will ensure that major decisions are taken in Johannesburg and it will also empower Standard Bank to determine the portfolio mix of the resulting Bank and thus avoid huge bad debt provisioning and eventual write-offs characteristic of agricultural financing.”

Grab your FREE COPY of the dailyEXPRESS on Monday for more on the actual proposals made by the three entities and the ADB’s verbatim position to government on the three proposals and in subsequent edition an analysis and reactions to the ADB position document vis a vis the proposals from the three entities.

By Xoese DOGBE [email protected]