The Construction Bank to give relief to real estate sector .com

A new bank, with focus on construction, infrastructure and mortgage financing, will begin operations today after it secured a licence from the Bank of Ghana (BoG) earlier this year.

The bank is expected to bring relief to the construction and real estate sector, after years of calls for a specialised bank for mortgaging financing failed to yield results.

Although it will be the first bank to focus on financing to the construction and the real estate sector since the collapse of the Bank for Housing and Construction in the 1990s, The Construction Bank will bring to 33 the number of universal banks offering financial intermediation in the country.

The Daily Graphic has gathered that the bank is owned by indigenous investors, including the former Managing Director (MD) of the then HFC Bank, Mr Asare Akuffo, who will serve as the inaugural chairman.

Mr Akuffo, who retired from frontline banking in April 2015, has enormous experience in mortgage, construction and property financing.

He is now expected to bring his years of experience and expertise in the mortgage, construction and infrastructure financing to bear on The Construction, which will play a lead role in financing prospective home owners, real estate and construction companies.

Timely intervention

The construction and real estate industry has enjoyed steady growth over the past 10 years, with average annual growth estimated at 10 percent.

While this is commendable, access to long-term, patient and low-cost finance has continued to be a bane, with the Ghana Real Estate Developers Association (GREDA) flagging the menace on an annual basis.

Its Executive Secretary, Mr Sammy Amegayibor, said the coming of The Construction Bank was timely for the development of the sector and its players.

“It’s coming will help fill the deficiency that the banking sector faces in focusing on the sector. As it is now, I am not aware of any dedicated bank that is committed to the financing of housing and construction after the collapse of the Bank for Housing and Construction,” he said in an interview.

The Bank for Housing and Construction, a state-owned bank, was liquidated in 2000, after protracted losses.

Since then, calls for its replacement have fallen on deaf ears, causing each of the various banks to offer bits and pieces of financial products and services to players in the construction, infrastructure and real estate business.

But given the peculiar nature of the business, Mr Amegayibor said a dedicated bank, with long-term, stable capital was needed to help propel growth in the various companies.

“Various banks have been trying to give loans for projects and that is fine but there is still the need for a dedicated bank that specialises in construction and real estate financing,” he said.

“Our hope is that this new bank will be more focused and understand us better,” he said.

The gestation period of projects in the construction sector requires that loans granted to the players are stable and long-dated, compared to the current loan books of banks which are predominantly short term.

Given Mr Akuffo’s experience at HFC Bank and the Social Security and National Insurance Trust (SSNIT), GREDA executive secretary was confident that The Constriction Bank would be an answer to the financial challenges facing the industry.

The launch of the bank is expected to attract heavyweights from the banking and construction industries, including officials from the BoG.

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