GABBY ASARE OCHERE DARKO MUST LEARN. A UNIVERSAL BANK IS INVESTMENT BANK, COMMERCIAL BANK AND DEVELOPMENT BANK ALL IN ONE.
My attention has been drawn to a post attributed to Gabby Asare Ochere Darko to the effect that I don’t know the difference between Investment Bank and a Universal or Commercial Bank. Given Gabby’s limited knowledge and understanding of this subject, I initially wanted to ignore it but I realised he drew my respected former lecturer in company law at the University of Ghana, Ace Ankomah into the conversation who seemed to agree with him.
Given the calibre and standing of Ace Ankomah and the weight his views carry in national discourse, I have been compelled to give some education to Gabby on Ghana’s banking industry and to correct his jaundiced misconception.
Gabby’s difficulty is to do with his understanding about how a Universal Bank can be a direct competitor to his cousin Ken Ofori Atta’s Databank. He seems to think that Databank is an Investment Bank whilst Universal Banks are commercial Banks and are therefore not direct competitors, but only complement each other. Clearly, Gabby has no clue of the competition of his cousins Databank. His understanding of the Banking industry takes the industry 30 years back.
I will try as much as possible to explain this in the most basic terms to accommodate his limited knowledge and understanding of Banking. Why do we call our banks Universal Banks and not commercial or investment banks? Any average mind would have asked this basic question before rushing to show such crux ignorance.
Once upon a time, Ghanaian Banks were licenced on special lines. Thus, each Bank had a licence to pursue a specialised banking service. So we had banks licenced to do only Investment Banking whilst others were licenced to do commercial or Development Banking. In Ghana at the time, Merchant Bank, National Investment Bank and later Ecobank were licenced to do Investment Banking business and nothing more. Banks such as Ghana Commercial Bank (so called to reflect this), Social Security Bank, Meridian BIAO, Standard Chartered and Barclays Banks etc were the commercial banks. The Bank for Housing and construction and Agricultural Development Bank were licenced for Development Banking.
After several years of banking sector reforms we agreed that all Banks could offer all these three banking services to improve profitability, access, coverage and a one-stop shop of banking services. As a result BOG abolished the regime of special banking licences and converted to Universal Banking licences to mandate them to offer the complete bouquet of banking services.
So Gabby Asare Ochere Darko should know that a Universal Bank is an investment Bank, Commercial Bank and a Development Bank all rolled in one. This was part of the thinking in rebranding Ghana Commercial Bank and Agricultural Development Banks into GCB Bank and ADB Bank to reflect their new role as Universal Banks.
I want to believe that I have simplified this to Gabby’s limited understanding but let me draw his attention to a few examples of areas of direct competition between Universal Banks and Databank’s operations and market. For example, when your Cousin Ken Ofori-Atta appointed the Universal Bank, Fidelity Bank to become the transaction advisor and sponsor of the failed Energy Bond, Fidelity was not engaging in commercial banking but investment banking in direct competition with Databank’s niche market. Again, when your Cousin shamelessly conflicted himself by appointing Databank as his transaction advisor (Joint Book runner at BOG) together with IC Securities, Stanbic Bank and Barclays Banks, they were appointed to offer investment Banking services. As a matter of fact, they and other Universal Banks competed against Databank for that job.
It is important to realise that a casual look at the Banks I have specifically mentioned in the list of collapsed banks belong to a group structure similar to Databank and Enterprise group. UT Bank, Berge Bank and Unibank all are also part of groups of companies. Each of these groups they belong run the same lines of Business as Ken Ofori-Atta’s Databank and Enterprise group. They all have Insurance, Pensions, Investment Banks, and Trusteeship etc. It is very myopic for Gabby not to know that the direct competition of these groups go beyond Databank to include these other subsidiaries.
In any group structure with a Universal Banking subsidiary, the Bank becomes the heart, father figure and strategic anchor of the group. If you collapse the bank in the group, the rest of the companies and strategic business units become vulnerable. By collapsing UT Bank, Unibank and Berge Bank, Ken Ofori- Atta has succeeded in eliminating the strategic anchor in these group of companies. The remaining businesses don’t have a “father” figure and strategic anchor anymore and cannot therefore compete against KEN Ofori Atta’s Databank and Enterprise Group.
I hope Gabby will never expose his ignorance in this shameless manner in future when matters of people’s lives, jobs, career and assets are being destroyed by the stroke of the pen for selfish ends. I have a very simple but important advice for him. Gabby, stay in your comfort zone and not get involved in discerning intellectual discourse (especially on financial sector issues) with your limited knowledge and understanding. Do what you do best. Propaganda, deception and scheming to ensure the success of Nana Akufo Addo and his family’s create, loot and share exit strategy for life beyond 2020. Earning a living through influence peddling has never been part of my life.