CAL Bank

Ghana's most actively traded stock is seeking a further USD 200m in capital, probably in two traunches, the first USD 100m by the end of the year. This is in response to the Bank of Ghana's requirement that all banks have to have a minimum capitalsation of USD 25m by 2010 and USD 60m by 2012. It should not be too difficult to achieve because this niche merchant bank has already attracted a number of frontier market players as investors (Renaissance, Vangaurd, Consilium and Eaton Vance).

We discussed the capital raising when we met with the bank in Accra as this will change its lending book. With the new oil industry kicking in around 2010, the bank sees opportunities to lend to ancilliary oil industries and in project financing.

The bank trades at a discount to its larger Ghanian peers. We attribute this to its size and quite large contribution to histroic earnings from its treasury operations.