The management of Agricultural Development Bank (ADB) says renting space in the Accra Financial Centre to house its headquarters is prudent and cost-effective.
Even though the decision to move has sparked dissatisfaction among the bank’s staff, management said the relocation is to house all headquarters staff in one building.
The Managing Director (MD) of ADB, Mr Stephen Kpordzi, told journalists in Accra that as a bank, it is not advisable to invest cash in non-earning assets such as building a head office, since the bank is already undercapitalised and under-invested.
He noted that the old head office accommodated only 40% of all departments that should operate from the headquarters.
As a result, he said ADB had to rent space in different locations in Accra to house the remaining 60% of departments that could not get space in ADB House.
He said ADB rented the Citizen Kofi building at Osu, rented another space in Nima to house its Central Processing Unit while the Achimota and Ring Road branches of the bank also hosted other head office departments.
He noted that paying utility bills and rent for the different locations was not in the interest of the bank.
Mr Kpordzi explained that following these challenges, the board of directors took the decision that all head office departments be housed in one building, hence the decision to rent and dispose of ADB House, which was valued at $10 million. However, he said the sale of the ADB head office failed, and the board would decide the next line of action.
According to him, even though the land on which Accra Financial Centre was built belongs to ADB, the bank could not afford to lock up its limited cash into non-earning assets such as building a new headquarters.
Consequently, the bank, with the approval of the board, entered into a partnership with a South African real estate company to put up the building, in which ADB has 10% shares, representing the value of the land. The land was valued at $2.4 million.
He stated that ADB has rented 7,250 square metres and each square metre costs $37 a month.
This means that the rent of the bank can go up when the cedi loses value against the dollar.
ADB has paid GH¢5.6 million as rent for six months.
On allegations that ADB wants to write off bad loans, Mr Bernard Appiah Gyebi, Head of Credit of ADB, said the bad debt, out of a loan book of GH¢1.25 billion, was GH¢268 million as at the end of 2014 and not GH¢600 million as alleged in the media.
He explained that writing off bad loans is a requirement of the Bank of Ghana (BoG), guided by clearly laid down rules.
He stated that from 2010 to date, ADB has written off GH¢97 million as bad debts.
He explained that writing off debts does not mean the defaulters have gone scot free.
According to him, instead of bad debts, ADB has adopted the term set aside and has engaged a plethora of law firms, both local and international, in addition to its legal department to retrieve the bad debts.
Mr Kpordzi told reporters that board members also have the right to take loans, and BoG has made provision for that.
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