Jv ne as exhib cone ai rio 1233244 226 106 1235 303942 72 5" March 2024 ‘The Board Chairman and Board Members Calbank Limited Accra POOR RISK MANAGEMENT, FINANCIAL MISREPORTING AND GOVERNANCE FAILINGS: THE DISSIPATION OF SHAREHOLDERS FUNDS am grateful for the audience granted me by management and some members of the board over the intended capital raise and the emerging disclosures over the financial state of the bank. | must nonetheless state my utter shock and disappointment in the current state of affairs. It is painful to note that my investment at Gi1S1.3 per share in 2017 valued then at about 30 US cents is today being discussed to be traded at GHS0.29 per share valued at less than 2.5 US cents. This is only because of the avoidable failings of persons we trusted to serve us fairly, honestly, and competently. In my case, I suffer a double loss as an individual investor and as a contributor to SSNIT, the largest shareholder. | have over the years invested in the bank on the back of my commitment to Ghanaian businesses and my confidence in what | believed to be a very professional and honest grouping of Ghanaian professionals who can show our foreign counterparts, Ghana's ability to develop and operate world class businesses Unfortunately, the emerging issues from the mandatory disclosures which have unearthed prior undisclosed impairments of over GHS1.2bn leaves much to be desired and brings into question the integrity and commitment of the management and board. A. The IBISTEK CREDIT i. Extremely Poor Credit Origination IBISTEK GHSibn impairment. Tacotel Takoradi Container Terminal 1. A review of the credit origination reflects a clear lack of thorough risk analysis, poor structuring and collateralisation and a wilful breach of single obligor limits in an extremely careless manner. It is evident that the board and management of the time failed to undertake an independent and competent due diligence before funding its single largest credit to an the port industry. | wish to cite thr entity with almost no oF i rial experience mation, exampies amidst many per my understanding and inf a. The project’s viability was benchmarked against a productivity level of 200,000 twenty: foot equivalent units (TEUs) per year at a time when the total productivity of the Takoradi port was under 40,000 per year. How can one explain the prudence in fundingand assured oiftake for future demand? Also note project tike this with no ¢ » from the port terminal was lo onent of USD52m. with a debt co: concrete floor at aver USP2mn per acre continues >. The cost of project is undoubte How we funded a simj to baffle me. it is not surprising that after six years of the completion of the project, the facility is valued at about USDi5mn despite the astronomic rise in construction prices and a prior spend of USD52m. The bank failed to undertake an independent and competent evaluation of the project and yet found it urgent and extremely necessary to breach its single obligor limits. In view of the above, one can only justifiably suspect fraud and a deliberate attempt by management and board members to loot shareholders wealth. | eagerly look forward to receiving a copy of the forensic audit being undertaken by PwC. No management or Board member found culpable or negligent by the audit must be considered fit to hold any fiduciary responsibility for any financial institution or listed organisation. Inaccurate Financial Reporting It was apparent to management and the board that by 2019, debt service by IBISTEK was well in default and for which impairment provisions and the suspension of interest income on the facility was required in compliance with prudential rules and the Bank of Ghana's manual of accounting, for banks. These provisions for impairment were required to be disclosed in the financials since 2019. Unfortunately, the management and board failed to disclose same but rather proceeded to recognise what may now be described as phantom income on a fully impaired facility with bonuses paid against overstated profits. This rendered our financials wilfully inaccurate and worsened the lot of shareholders in the long run. Whereasa provision of about GHS370mn would have been made in 2019 ata time when our capital stood at over GHSgoomn, we are now faced with a proposal to impair GHStbn at a time when our capital stands at about GHS6oomn. This action of the board is an absolute breach of its fiduciary responsibilities to us as shareholders and worsened our lot. The recognition of the uneamed ‘Phantom Interest Income’ caused us to incur overstated tax obligations of up to about GHS25omn (in my estimation), further eroding shareholder funds. While only Helen Nankani remains a surviving member of the previous board and is partly responsible for the failings in the credit origination, every member of the current board is responsible for the wilful and inaccurate reporting of the financials of the company to shareholders and the market. POOR RISK MANAGEMENT Our excessive exposure to government bonds accounted for our largest impairment provision of GHS1.4bn in 2022. Our position relative to contemporaries like Fidelity Bank (GHStbn impairment) 4 Bank (GHS0.6bn impairments), who both have triots like Standard Chart. and quartile comp: larger assets, shows a sign of sub-optimal risk management systems on the part of the board. It is a clear failing of the risk management committee of the board, What policies were put in place to cap exposure to a single obligor like government? What recurring analysis of government riskxposure just as other competent banks did? Bear in mind you The non disclosure of the IBISTEK irr nts 5 Management, leading to us paying undue taxes of ahout GHS>somn (in my estimation) for recog, phantom income and falling to ‘© needed impairment provisions also evidences the board’s poor risk management. \¢ regulator’s rules and good governance standards and not yield undertake ¢! How do you expect to breact consequences? 3. Iam duly informed that management presents quarterly risk reports and reports on the IBISTEK transaction, our single largest exposure. One can only conclude that the risk committee and systems superintended by the board were flawed and totally incompetent to read in between basic risk fines and regulatory requirements. The conduct of the board is a clear breach of its mandate as directed by the Bank of Ghana’s Corporate Governance Directives, 2018. 4. The failings of the previous board and management and the subsequent failings of the risk committee of the current board and management reflect a deep culture of unaccountability, impunity, and poor risk management. This accounts for the poor management of the IBISTEK credit origination by the previous board and the bad management of the credit by the current board. C. CAPITAL RAISE Our approval granted at the last annual general meeting (AGM) for the capital raise was premised on the financial state of affairs as declared to us by the board and management at the time. Your failure to fully disclose the impairments of the IBISTEK credit while recognising phantom income was totally misleading. The board unequivocally and wilfully misled us to approve a capital raise of GHS 600 million when you knew an IBISTEK loan of GHS 1 billion was nonperforming. Even in your half-year 2023 report, you failed to disclose the default and impending provisions. The procurement of our approval with inaccurate financials over the years and without presenting us the true picture and state of the bank is most unfortunate, a breach of your fiduciary responsibility and may be considered fraudulent, and as such, is illegitimate You have deliberately not been transparent to shareholders. The board was appointed to protect the investment of shareholders but rather it has joined forces with management to destroy the value of shareholder funds. D. CONDUCT OF THE BOARD 1. Ihave taken note of the excessive meetings of the board excused by crisis, also caused by the board, and leading to excessive board fee payments averaging about GHS1.3mn per board member for 2023. | do not find this conduct conscionable at a time when shareholder funds have been dissipated by the same board. You create a problem and turn round to profit from same. It is most unconscionable! Do you think of that poor pensioner who looks up to you for a return on to be honest and fair to him or her? his investments by trusting you rs’ remuneration exceed remuneration wonder how you will explain why non-executive direc of senior bank executives? With the impending loss and dissipation of shareholder funds, did the board not have the sense of empathy and responsibility to moderate its fees and number of meetings as a sign of its sensitivity to the times? The board found reason to suspend proposalsE. y increases bul found no reason to stop bloating its own spend by abou the greatest of respect, the conduct of this board is unreasonable and heartbreaking, t porate ce Directives shows that the conduct of the board is awash with one too many breaches including directives on risk management, internal controls, disclosure and transparency. The board has totally failed to exercise its fiduciary duty to protect and promote the interest of shareholders for which reason you were appointed. To the extent that your current provisions totally wipe out shareholders’ funds into a negative balance, you have also failed to protect the deposits of the customers of the bank, WAY FORWARD ‘The failure of the board and managementis grave, and all must be made to account for their failings and breach of trust and their fiduciary responsibilities. Based on the above, | expect the following reforms within the next two (2) weeks 1 10. 1”. 2 An immediate restatement of the financials of the bank to reflect the impairments in compliance with the Bank of Ghana rules from 2019. Recovery of all bonuses paid to previous and current management against the overstated profits. To immediately engage the Bank of Ghana for a regulatory forbearance to file accounts later than the required timeline of 31 March 2024 and other related matters, A suspension of the capital raise The holding of an emergency general meeting to consider the new accounts and proposals, if any, for a capital raise. ‘A revaluation of the bank’s landed properties to reflect the true value on the books of the bank (if not already done), Reversal of all phantom interest income related to the IBISTEK credit and related tax provisions. The immediate resignation of the Chief Risk Officer. All members of management and board involved in the origination, approval, monitoring and reporting of the IBISTEK transaction, performance including reporting in the annual financials should resign immediately. All board members on the risk committee should resign and the committee immediately reconstituted with co-opted and competent professionals. Nominations should be made in consultation with the major shareholders. The board will have to be reconstituted in a phased manner over the next 6 months as may be advised by the board chairman. No member due for renomination should stand for re appointment. The bank must transition from the existing board members to new board members with of competence and integrity to protect our investments. Contrary to the current board charter that empowers current members to nominate replacements unto the board (| stand to be corrected),a corporate governance expert firm (EY and or PwC nominated) be appointed to assist igh level with nominees for consi The board charter should be immedi firm to introduce @ new board charter that will guide the new board to steer the affairs of the bank going forward. This charter should cap the income of the board with remuneration set in the by a world class corporate governance expert review reporting currency of the bank.he boa: appoint a new CEO. The complicity of tt sion of the process init acity to objectively appoint the new CEO. The new Board the issues raised conflicts its c2 should be authorised to effect the appointment bove actions are not carried, | have no other choice than to do the following: Institute legal proceedings against the company in relation to any steps to proceed with the lued for the failings capital raise. | do not intend to sit by while my investments are wrongfully v of the board To report each of the board members of the bank as well as key management personnel to the Bank of Ghana to be barred from holding any board or management position in any financial institution in the country going forward due to this gross misconduct. To report each of the board members to the Securities Exchange Commission to be barred from holding any board position in listed companies in the country going forward due to this gross misconduct. Take steps to report this gross misconduct of management and the board to the Economic and Organised Crime Office (EOCO) for investigation and likely prosecution, This is to set a strong precedence of both management and the board from misleading shareholders again in this country. To hold a press conference to involve the public of the conduct of management and the board over the years in Calbank PLC. Remember owners of the bank include SSNIT and the pensions of the poor Ghanaian. Rally other investors, pensioners, and pension contributors to institute legal proceedings against each responsible member of the board and key management personnel of the bank. | am hopeful about the future of Calbank, but such hope is moot without the necessary reforms and transformation of a culture from impunity and arbitrariness to accountability, responsibility, integrity, transparency, ownership and prudence. remain. Senyo Kwasi Hosi Shareholder, Calbank cc. Board Chair, Social Security and National Insurance Trust, Shareholder Director-General, Social Security and National Insurance Trust, Shareholder Arise B.V., Shareholder Mr. Frank Brako Adu Jnr., Share Mr. Daniei Ofori, Sharehe Ag. CEO, Calbank Jead, Investor Relations| D CalBank PLC - Confidential (Third Parties) ay CalBank (MEETING MINUTES ‘SUBJECT ‘Meeting with Senyo Hosi (CalBank shareholder) on Pema te 30 PURPOSE Discussion on Senyo Host’s letter to CalBank Board ‘MEETING BACKGROUND Following Mr. Senyo Hoss letter of Monday 5! March 2024 addressed to CelBank directors and key shareholders (SSNIT, ARISE, Frank Adu and Daniel Ofori), Mr, Hosi requested a meeting with the Board Chairman at short notice on Thursday 7 March 2024 to discuss the contents of letter. The letter enumerated how Mr. Hosi believed that there has been @ dissipation of shareholders’ funds and iad out recommendations on reforms that the bank had to undertake, Highlights of the meeting are as follows: HIGHLGHTS: Attendees © SenyoHosi — - CalBank shareholder © Joe Mensah —Board Chairman, CalBank. CarlAsem Acting Managing Director, CalBank. ‘© Dzifa Amegashie - Head, Corporate & Investor Relations, CalBank ‘Aims and Objectives of the Meeting Review of Senyo Hosi's letter to the Board dated on Dissipation of Shareholders Funds Issues discussed. Senyo Hosi expressed gratitude for the opportunity to adress the Board Chairman regarding hs letter to the Boor and his voeommendations on reforms to be undertaken by the Bank going forward. He emphasized his view that CalBank is @ leading brand that must not be allowed to fal, and he understood the need for the capital ralse. He believed that it was notin the poltical or economic interest ofthe Bank of Ghana or ary regulators to allow the Bank to fall, Whilst his letter may have come across alist of demands, Mr. Hosi insisted that he was attending the meeting in the spit of negotiation, He therefore wished to discuss each point raised in his letter to ensure that the bank moves forward. Below Is @ summary of all the points discussed: 1. Restatement of the financials of the bank to reflect the impairments in compliance with the Bank of Ghana rules from 2019, Reversal ofall phantom inte‘est income related to the IBISTEK credit and related tax provisions. ‘The mecting acknowledged the potential benefit ofthe restatement to the balance sheet by way of potential tax credits through the reversal ofthe overcharged taxes. The meeting also recognized the herculean task in securing the tax cred't from the GRA, a process that may take an Indefinite time, This, coupled with the immediate complications with the bank's trading relationships and the impossibility of meeting capital adequacy and undertaking a capital raise ahead of statutery melines, renders the proposal potentially catastrophic. Mr. Hos reconsidered this and is now amenable to dropping the demand for restatement of the financials. 2, Recovery ofall bonuses paid to previous and current management against the overstated profits ~ Mr. Hos! Sonfiemed that this demand for bonus recovery was limited to senior officers who were directly Involved in the sonrctntement of profits, notably the CEO and CFO and any senior management and board members who receivedCalBank PLC - Confidential (Third Parties) necessary to emphasize that managers In the business cannot be rewarded for poor performance, bloating tax obligations ‘and dissipating shareholders. The Board Chair agreed to consider it. 3. Immediately engage the Bank of Ghana for a regulatory forbearance to file accounts later than the required ‘timeline of 31st March 2024 and other related matters. ‘The Board Chairman explained to Mr. Hosi that forbearance discussions with BOG were already underway regarding the 31st of March 2024 deadline for account publication and other forbearance measures which Mr. Host accepted. 4, Suspension of the capital raise and holding an EGM to consider the new accounts and proposals. Mr. Hosi withdrew this request for a suspension of capital raise and holding an EGM immediately as he understood the need for the capital raise to prevent the Bank from failing, However, he believed that there must be maximum consultation with the key shareholders ahead of the 2024 AGM to sell them the story of CalBank’s future, which he was happy to support the bank with by getting involved. 5. Revaluation of the bank’s landed properties to reflect the true value on the books of the bank ‘Management explained that the last revaluation was conducted in FY 2022. However, Mr. Hosi believed that despite the policy of revaluation every 3 years, given the high inflation and currency depreciation in 2023, a revaluation should be ‘conducted in 2024 to give a better valuation of the bank's fixed assets and improve the bank's valuation. The Board Chair ‘committed to engaging the Bank of Ghana and the external auditors on the possibility of recognizing the revaluation in ‘the 2023 accounts. 6. The immediate resignation of the Chief Risk Officer and Chief Financial Officer Mr. Hos! insisted on this condition. He said the BOG Corporate Governance directive was clear that the Chief Risk Officer ‘also managed credit risk, He therefore insisted that the Chief Risk Officer be encouraged to resign or be dismissed. The CFO cannot absolve himself from the misstatement of the accounts. 7. Corporate Governance matters Mr. Hosi expressed disappointment at the current state of the Bank given the high professional capacity of the current board members. Inhis view, board members had either “slept on the ball” or didn’t have the proper expertise. The reforms he was proposing were needed to send the right orientation signal down the spine of the bank. Key corporate governance reforms he demanded are: ‘© Board Risk and Credit Committees Mr. Hosi emphasized that the board should be review and strengthen the entire Risk Management framework. Whilst the Ibistek credit was approved during the tenure of the former CEO, Frank Adu, he cannot be held responsible for the Impairment ashe leftin 2019, Mr. Hosi aid he wished to state for the record that the current Risk Committee Chairperson was a friend and a church member who he has the deepest respect for as well as for his family. However, the Chief Risk Officer cannot be encouraged to resign/dismissed whilst the current Risk committee members remained as this would be unfairly scapegoating the Chief Risk Officer. In his opinion, the Risk committee members had failed and are therefore unfit to continue providing the Bank that service. He noted that 2 Risk committee members were up for re-election at the ‘upcoming AGM. For the above reasons, Mr. Hosi insisted on the following changes: a. Atleast one ofthe 2 risk committee members up for re-election should not present themselves for re-election at the upcoming AGM and should resign. However, this should be done in a dignified ‘manner explicable by the general changes following the capital ralse. b. New risk committee members must be appointed; either rotated from other existing board ‘members or from new board members that may be appointed through the capital raising exercise. ‘This should be immediate. + Board reconstituted over the next 6 months. ‘The Board Chair requested that this proposal be phased over a period of about two years to provide room for new shareholders that may emerge after the capital aise to partake in the process. t was agreed that the directors up for re election should retire and not present themselves for re-election beyond the 2024 AGM.CalBank PLC - Confidential (Third Parties) ‘© Board charter Mr. Hos! insisted that the Board Charter must be revised and updated by a corporate governance expert frm (EY and or PwC nominated) appointed to assist with nominees for consideration by shareholders. The new charter must be drafted mn consultation with shareholders and must be approved by shareholders, + Board fees. iit, Hos! complained about high board fees and uncapped frequency of meetings. The new board charter should cap the income of the board with remuneration Set in the reporting currency ie. Ghana cedis as board work is more service then exerutive work. Further, the CEO salary can no longer be dollatized but must be remunerated in the same currency as stff CEO compensation could include clauses for revision to reflect inflation and other annual increments. Mr Hos elsed concerns about the number of board members and the consequential impact on board expenses and fifecivanass. Citing better performing banks tke Ecobank and Fidelity bank with 7 and 9 board members respectively ie, Hos! argues thatthe Calbank Board be rationalised to reflect the current productivity of the bank. A cap of 9 beard meraber was recommended. 8. Suspension ofthe process intiated by the board to appoint a new CEO. Mr Hos Inlay insisted that the complicity of the board in the issues raised confcts with its capacity to objectively appoint the new CEO. The current board would be selecting a new CEO influenced by their desire for self-preservation, ‘Therefore i the board members are exiting over time, itis only proper that the new investors appoint a new CEO. With variations to the earlier proposal to fully change the Board, Mr. Hosi has withdrawn this proposal. Concluding remarks Me. {sl afirmed his faith in the board Chairman, CalBenk and its prospects, but re-iterated that his trusts subject to fransformation from a culture from impunity and arbitrariness to accountability, candout, responsibilty, integrity, ‘transparency, ownership, and prudence. CalBank Chalrman agreed with the need for 2 culture change and affirmed that the Bank would work with him to Strengthen the institution going forward to do better. He further agreed to consider and drive the proposals as revised in the meeting. (Mr Joseph Mensaf WE ee (Board Chairman) (Shareholder)owe sine Accra, Ghana, 27" March 2024 (BANK PLC RENOUNCEABLE RIGHTS ISSUE OFFER TIMETABLE CalBank Ple("CalBank’ or the “Bank") announced the Bank's Renounceable Rights Issue on 21 March 2024. “The Bank seeks to ralse GHS 600,000,000 through the issuance of 2,068,965,517 shares (“Offer Shares”) of ro par value at GHS 0.29 per share in a ratio of 1 Offer Share for every 0.3033 existing share held by a qualifying shareholder. “The Offer Shares comprise 1,872,461,736 Ordinary Shares in a ratio of 1 new ordinary share for every 0.3352 ‘existing ordinary shares and 196,503,781 preference shares ina ratio of 1 new preference share for every 3.1935 existing ordinary shares held by a qualifying shareholder. 28% March 2024 00pm Qualifying Date 3° April 2024 4.00pm ‘Book Closure Date ‘4 April 2024 4.00pm ‘Commencement of the Offer ‘April 2024 9.00am ‘Commencement of trading in Rights ‘S* April 2024 10.00am ‘Closure of trading in Rights, 19 April 2024 3.00pm Offer Closure Date 26" April 2024 ‘4.00pm ‘Application review and commencement of allotment process __28Y April 2024 9.00am End of allotment. 2° May 2024 4.00pm Refund commencement date 6* May 2024 9.00am ‘Submission of Offer results to SEC 6 May 2024 ‘4.00pm Receive approval of Offer results from the SEC ‘a May 2024 4.00pm ‘Credit Offer Shares to successful applicants on the CSD 13 May 2024 5.00pm “Additional listing of Offer Shares for trading on the GSE 16 May 2024 9.30am) Deadline for refunds to unsuccessful applicants 116" May 2024 4.00pm ‘The exrights and qualifying dates for the Offer have been set for 28 March 2024 ‘and’3 April 2024 qeopectively, Only shareholders onthe register of members of CalBank as at te close of business on April 2024 will be entitled to exercise thelr rights under the Offer. qualifying Shareholders can subscribe to their Rights (as defined in the Circular) at the premises of 1, ry eaGank Franch, or through the online portal at hits/fiahlsissun.calbank nel when the Offer opens on 5 April 2024, Ifyou have any ques regarding the Offer, please do not hesitate to contact:CalBank Ple 23 independence Ave ‘Accra-Ghana Tel: 233 (0) 302 680081,680083 Email: investorrelatlons@calbank.net IC Securities (Ghana) Ltd No. 2, Johnson Sirleaf Road Accra—Ghana I: 233 (0) 308 250 051