By: Fred Yaw Sarpong
UT Bank Limited has secured a US$10 million subordinated loan agreement from Amethis Finance, a Paris based Private Equity firm. However, the loan is subject to approval from the Bank of Ghana, the regulator of the banking industry.
The US$10 million loan will support UT Bank’s capital base allowing it to efficiently grow its lending to the small and medium enterprise (SME) sector in the country.
In an interview with the Chief Executive Officer (CEO) of UT Bank, Prince Kofi Amoabeng in Accra last week after a meeting with the Amethis Partners, he said this loan will not affect the interest some local entity’s has in the UT Bank.
He stated that the IFC loan, which was equity in a way takes more control on local activities, however, he added that the Amethis money is a debt and it does not control the shareholding structure of the bank.
This is debt partners and seven years time we supposed to pay back the money. Maybe we will ask them to extend it rollover so that it can grow bigger, but it has nothing to do with the shares of the bank,’ said Amoabeng.
UT Bank will pay within seven year period at an interest of 6% per annum. UT Bank boss explained that the reason why they went for the external loan is that, it is cheaper than raising money locally, especially at when one will be paying about 25% interest rate compared to 6% from outside Ghana.
He also said that the loan will reduce the bank cost of doing business, which will help them have minimum or limited base rate, which is the determine factor of product and service to their clients.
He said that bank is comfortable in going for such loans because if UT Bank has not positioning itself well, there is no way they can secure such loans from international partners. ‘This alone shows that UT Bank has a good track record with a good projection for the future,’ Amoabeng added.
He stated that it is good to have these kinds of long term loans because it helps them to grow, expand and extend credits or loans to their clients.
The bank strategy is to strengthen its positioning in the SME market in Ghana and develop its retail footprint with branch expansions and the use of technology to attract cheap deposits.
Laurent Demey, Managing Partner of Amethis Finance said the transaction fits perfectly with Amethis strategy to support mid-size fast growing local banks, targeting institutionalization and market expansion with a strong retail and SME footprint.
The Investment Director of Amethis, Laureen Kouassi-Olsson said they have been impressed by the sound performance posted by the UT Bank as well as by its innovative approach towards SME lending.