We’ll save uniBank first, probe management later – BoG

source: citifmonline

The Bank of Ghana (BoG) has said establishing wrongdoing on the part of the hierarchy of uniBank is not its key focus, after the Central Bank took over management of the indigenous financial institution.

The BoG’s 2nd Deputy Governor of the Bank of Ghana, Elsie Awadzi said the takeover of uniBank is primarily to keep it from collapse.

“We do have information as to violations of the regulatory framework and what we think was done and not done. The purpose of putting an official administrator in place is to get hold of irrefutable evidence that allows us to move forward. It is not the entire objective. The key objective is to save the bank and to turn it around to be a stronger and a better bank,” Elsie Awadzi stated on the Citi Breakfast Show.

She said once the bank’s situation had been stabilised, pursuing possible wrongdoing was still on the table “for the sake of the public trust that is reposed in banks and for the sake of depositors.”

She explained further that information gathered during the takeover will also be key to addressing the failings of the bank’s management.

“On the basis of any such information that we obtain, we will see what the options are for addressing and correcting what has happened in the past. We will involve any other authorities that need to be involved to take up the matter.”

Status of UT Bank and Capital Bank probe

Elsie Awadzie also gave a similar explanation for the probe into whether the activities of the top officials of UT Bank and Capital Bank led to the collapse of the two financial institutions in August 2017.

UT Bank and Capital Bank were unable to turn around their negative capital adequacy position, which necessitated a Purchase and Assumption agreement allowing GCB Bank to take over all their deposit liabilities and selected assets.

According to her, once the takeover of the two banks was confirmed, the BoG immediately began working towards ensuring that the assets of the banks were secure.

“In the case of UT Bank and Capital Bank we were winding up those banks and the first order of business was to immediately lay hands on assets to be able to recover value and take them back,” she said.

She added that the management of BoG has proceeded to investigate the top management of the banks and would finalize the reports in due time.

Review of supervisory framework

The BoG revealed that uniBank had failed to comply with a directive from the BoG to stop granting new loans whilst also and deliberately concealing some liabilities from its balance sheet.

uniBank also failed to comply with several other regulatory requirements, including lending to a number of borrowers in excess of its regulatory lending limit.

Before all this, uniBank was one of nine banks identified after the asset quality review exercise undertaken in 2016, to be significantly undercapitalized with a capital asset ratio of 4.75%.

The state of uniBank ahead of its takeover called into question the monitoring capabilities of the BoG.

Elsie Awadzi responded to this by saying the BoG was going to review its supervisory framework.

“We as new management of the Bank of Ghana are taking steps to review our entire supervisory and lending framework and liquidity support framework. We are taking steps to make sure the system is not exploited and that it is a framework that is resilient, that it is a framework that has integrity and that it is a framework that is not abused by the market.”

BoG, KPMG takeover

The Bank of Ghana announced KPMG Ghana as the administrator when it announced it had taken over the management of uniBank.

According to the central bank, it took the decision to save uniBank from collapse.

The BoG in a statement said KPMG as Official Administrator will play the key role of assuming control of the bank and all its branches and “carry out the responsibilities of the shareholders, directors, and key management personnel of uniBank.”

It stated that during the period of official administration of uniBank, “the bank will remain open for business under the management and control of KPMG overseen by the Bank of Ghana, and is not being closed and liquidated.”

uniBank was found to have persistently maintained a negative capital adequacy ratio below zero making it technically insolvent.

This contravened the 10% minimum capital adequacy ratio required.

uniBank also suffered liquidity shortfalls and consistently breached its cash reserve requirement.

As a result, uniBank relied extensively on liquidity support of over GHS 2.2 billion from the Bank of Ghana over the past two years to meet its recurring liabilities.

Elsie Awadzi Ghana News Unibank Delali Adogla-Bessa

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