"Banks reject amended debt exchange offer, ask for deadline extension"

" Banks reject amended debt exchange offer, ask for deadline extension \r\n\r\nThe Ghana Association of Banks (GAB) has directed commercial banks not to sign onto the amended debt exchange offer over uncertainty surrounding the impact of the debt restructuring on the banking industry.\r\n\r\nThe association wants its concerns addressed before accepting the debt exchange offer, according to a letter sent to managing directors of banks.\r\n\r\nGAB told member banks that may want to consider the debt exchange in its current form to formally inform the association first before doing so. \u201c\u2026From the uncertainty surrounding the programme, GAB recommends that all banks must stay any further movement on the exchange until our demands have been met. However, in the event that a bank may have to move forward to exchange, the MD\/CEO must inform the CEO of GAB directly of the decision,\u201d according to the letter sent to the banks.\r\n\r\nThe decision was made after a high-level multi-stakeholder meeting involving GABS, the Vice President, the Minister for Finance, debt management advisors, and financial sector regulators including the Bank of Ghana.\r\n\r\nThe intercepted document suggests that the leadership of the banking group at the meeting put forward several demands to mitigate the impact of the domestic debt exchange programme on the banking sector.\r\n\r\nAfrica\u2019s second top gold prouder has signed a staff-level agreement with the International Monetary Fund for a $3 billion bailout package.\r\n\r\nHowever, the board approval is hinged on a successful debt restructuring that will reduce the country\u2019s debt servicing obligations. Previous reports indicate that banks were hesitant to sign onto the programme, adding to the list of rebellions fighting the domestic debt exchange.\r\n\r\n \u201cIf the debt exchange programme is implemented in its current form, the banking sector would lose about GHS 5.9 billion in revenue alone, incur a loss before tax of about GHS 14.5 billion and a liquidity gap in excess of GHS 20 billion,\u201d the document stated.\r\n\r\nThe banks warned that the debt exchange would lead to massive job losses as they will have to scale back on their operations. The association wants the January 16 deadline for bond holders to sign up for the debt exchange programme extended to allow for more engagement.\r\n\r\nThe government has already postponed the deadline on two occasions. While many stakeholders at the high-level meeting appeared aligned with the suggestion to extend the deadline for the third time, the Finance Minister and the French company advising the government, Lazard, opposed the request.\r\n\r\nThey argue that any further postponement of the deadline will affect the credibility of the debt exchange programme."

"Banks reject amended debt exchange offer, ask for deadline extension"

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