Crisis Rock CAL Bank ·MD’s Job Under Threat

Shareholders of CAL Bank would on June 5, 2008 hold an Extraordinary General Meeting (EGM) at the Osu Presbyterian Hall in Accra to carry out a number of transactions including the ousting of the bank's Managing Director.

The single largest individual shareholder of CAL Bank, Afare Apeadu Donkor who holds 11 percent shares in the bank, on Tuesday called for the immediate removal of Frank Adu Brako Jnr, Managing Director (MD).

Mr. Apeadu Donkor, who at a point in time was barred from sitting on the board of any financial institution in Ghana, is pushing for the appointment of three new directors including himself; Dr. Kobina Quansah, former MD of Barclays Bank; and Yoofi Grant, as well as the appointment of a new managing director and chairman.

The Central Bank later reversed the decision of him being barred from sitting on a board of a financial intermediary.

He sought to be represented on the board of directors of the bank but later rescinded that decision after the issue dragged in court for months and later settled out of court.

Mr. Apeadu Donkor, the founding Managing Director of the bank between the period 1991 and 1995, is also calling for an increase in the bank's stated capital to GH¢100m through a rights issue instead of the GH¢200m that was proposed at the bank's AGM.

The development could see imminent depreciation of shares of the bank in the coming days as investors and financial analysts are clearly monitoring issues.

The proposal of Mr. Apeadu Donkor, Ghana's Ambassador to China, comes on the heels of the resignation of the board chairman, George Victor Okoh and a director, Alhaji Asuma Banda.

Since investors react to any information on a company, be it positive or negative, shares of CAL may decline again, though it was the most actively traded equity on the Ghana Stock Exchange in the first quarter of this year, making gains of 58 percent and reaching GHp71 before retarding to GHp 60 due to a number of reasons.

The rejection of certain proposals such as increasing the stated share capital of the company by up to GH¢200 million and the increase in the directors' remuneration to GH¢377,000, about 79 percent over the previous financial year, caused the share price reduction.

The proposals were rejected by the three largest shareholders, the Social Security and National Insurance Trust (SSNIT) with 26.63percent holdings, Mr Apeadu Donkor and Danny Ofori with 7.70 percent.

As at yesterday, CAL was still trading at GHp62 per share but these developments could have an effect on the share price unless the unusual happens.

Nana Asante Bediatuo, legal counsel for Mr. Apeadu Donkor in an interview with CITY & BUSINESS GUIDE explained that his client took his decisions after a careful study of the situation.

He said at the centre of his client's proposal is an apparent under-performance of the bank under the current MD even though the bank achieved an operating profit before tax of GH¢8.3 million with profit after tax of GH¢6.4 million for the last financial year as against GH¢6.8 million and GH¢4.7 million in 2006.

Total assets of the group increased to GH¢234 million at the end of 2007 in comparison to GH¢157 million at the end of 2006.

It will be recalled that CITY & BUSINESS GUIDE reported in one of its March editions that controversies characterized the AGM of CAL Bank when the three largest shareholders of the bank rejected all the three major resolutions that the bank was seeking to pass.

This apparently triggered the objection of the resolutions by almost all the other shareholders that attended the AGM and apparently led to the suspension of the issues which was accepted by the board then led by its chairman, George Victor Okoh.

In 2006, First City Monument Bank of Nigeria nearly acquired majority stake in CAL on the Ghana Stock Exchange through a hostile takeover but the Central Bank stepped in to prevent the shares from being traded.

Joe Aboagye Debrah, a Corporate Lawyer and Chief Executive Officer of Think Ghana told the CITI Breakfast Show that the present agitation demonstrate a complete breakdown in relationship between management and shareholders which is not a good omen for the bank.

Efforts by this paper to reach Mr Frank Adu Jnr for comments proved futile as he failed to answer our numerous phone calls.