Banks In Receivership
Bank of Ghana (BoG) on 1 August 2018 revoked the banking licences of uniBank Ghana Limited (uniBank), The Royal Bank Limited (TRB), The Beige Bank Limited (Beige Bank), Sovereign Bank Limited (Sovereign Bank), and The Construction Bank Ghana Limited (TCB) and placed them in receivership in accordance with the Banks and Specialised Deposit-Taking Institutions (BSDI) Act, 2016 (Act 930). Further to the above, BoG appointed Nii Amanor Dodoo as the Receiver of the above mentioned banks in line with Section 123 of the BSDI Act 930 and approved the transfer of all validated deposits, selected assets and selected liabilities of the defunct banks to a newly formed bank, The Consolidated Bank Ghana Limited – CBG, through purchase and assumption agreements.
Circumstances leading to the revocation of the licences of the banks by Bank of Ghana
Incorporated in 1997, uniBank received its banking license in 2001 and started offering financial services primarily to individual customers and small and medium-sized enterprises. Reasons cited by Bank of Ghana for the revocation of the bank’s licence included the following:
- uniBank had given out amounts totalling GH¢1.6 billion to shareholders and related parties in the form of loans and advances without due process and in breach of relevant provisions of Act 930. In addition, shareholders and related parties had also been given amounts totalling GH¢3.7 billion which were neither granted through the normal credit delivery process nor reported as part of the bank’s loan portfolio. They were also not secured with collateral, and attracted no interest income for uniBank. Altogether, shareholders and related parties of uniBank had taken out an amount of GH¢5.3 billion, constituting 75 percent of total assets of the bank;
- Out of total customer deposits of GH¢4.3 billion, GH¢2.3 billion was not disclosed to the Bank of Ghana. Loans and advances to customers were also overstated by GH¢1.3 billion in prudential returns to the Bank of Ghana;
- Over 89% of uniBank’s loans and advances book of GH¢3.74 billion as of 31st May 2018 was classified as non-performing, in addition to amounts totalling GH¢3.7 billion given out to shareholders and related parties which were not reported as part of the bank’s loan portfolio;
- After making allowances for impairments to recognise the deterioration in the quality of uniBank’s assets and other requirements under Bank of Ghana’s capital adequacy framework, uniBank was balance sheet insolvent with negative shareholders’ funds of GH¢6.78 billion as at 31 May 2018 (representing assets of GH¢ 2.38 billion less liabilities of GH¢9.15 billion);
- The bank therefore had a capital deficit of GH¢7.4 billion, compared to the regulatory minimum of GH¢ 400 million;
- After making adjustments to uniBank’s balance sheet to offset outstanding debts totalling GH¢ 428,817,961 owed it by Government contractors (backed by Interim Payment Certificates issued by the Government), the bank’s liabilities (including an amount of GH¢ 3.04 billion owed to the Bank of Ghana) remain significantly more than its assets, and is therefore insolvent.
Bank Spread Analysis
Publication of Notice of Appointment of Receiver at each Branch of the Banks
As part of the intervention activities and in line with Section 125(2) of Act 930, the Receiver displayed notices at each branch of the five (5) banks in receivership. The notice disclosed the appointing authority of the Receiver, information indicating that the authority and functions of management of the respective banks ceased from 1 August 2018, which was also the effective date the Receiver assumed control of the banks.