The trinidad Guardian / Republic Bank yesterday issued a statement seeking to clear the air on allegations made by opposition senator Wade Mark in the post-budget Senate debate that the Bank was utilizing the country’s scarce foreign exchange reserves to fund an injection of US120 million into its subsidiary HFC Bank (Ghana).
The release said: “The requirements of the Bank of Ghana (Ghana’s Central Bank) are that ALL financial institutions have a minimum paid up capital of GHS$120 million (US$27.4 million) by December 31, 2017 and GHS$400 million (US$91.3 million) by December 31, 2018. Both requirements were aimed at strengthening the financial system in Ghana in the long term interest of all stakeholders and the national development. Currently, the paid up capital of HFC Bank (Ghana) is GHS$96.2 million (US$22 million). The Board of HFC Bank (Ghana) approved a rights issue of GHS$50 million (US$11.4 million) to ensure compliance with the December 31, 2017 deadline. Republic’s share of this rights issue is GHS$28.6 million (US$6.5 million). To achieve the December 31, 2018 deadline an additional capital injection of GHS$260 million (US$60 million) will be required from all shareholders of which Republic’s share will be GHS$149 million (US$34 million).”
The Bank added that: “Historically and currently, Republic Financial Holdings funds ALL of its non-trading foreign exchange needs through a combination of (a) foreign exchange earned from the dividends paid by our subsidiaries throughout the Caribbean and Africa and (b) investment income earned from the deployment of the Bank’s US Dollar assets. The requisite injections for HFC Bank (Ghana) will, therefore, be financed through the dividends/income earned from our overseas equity and other investments.”
The Bank pointed out that “injections received from the Central Bank of Trinidad and Tobago can ONLY be used for the purposes of resale to the business community in Trinidad and Tobago.”
It said that it reports the use of US proceeds to the Central Bank shortly after its injection.
Chiding Mark’s comments further, Republic said it was “disappointed by the ill-judged use of a budget debate to disseminate unfounded allegations that could injure the reputation of a financial institution with over 179 years of unstinting service to the people of Trinidad and Tobago and the wider Caribbean”