Government has established a new indigenous Bank—Consolidated Bank Limited— in place of five local banks whose licenses have been revoked, with immediate effect, by the Bank of Ghana (BoG).

To that effect, all deposits of the five banks have been transferred to the Consolidated Bank and all staff of the five banks will become staff of the Consolidated Bank, except the Boards of Directors and shareholders who would no longer have any role to play in the affairs of the Consolidated Bank.

The five banks are UniBank Ghana Limited, Royal Bank Limited, Beige Bank Limited, Sovereign Bank Limited and Construction Bank Limited.

Dr Ernest Kwamina Yedu Addison, Governor of the Bank of Ghana (BoG), who announced these at a news conference in Accra, yesterday, disclosed that Mr Amanor Dodoo had been appointed as the Receiver for the five banks.

Dr Addison assured all customers that their deposits were safe and that all customers should carry out business at their respective banks which would now become branches of the Consolidated Bank.

He expressed the commitment of BoG to supporting the orderly development of Ghana’s banking sector, including indigenous Ghanaian banks while promoting a strong and resilient sector to drive Ghana’s economic growth.

Explaining the rationale for BoG’s action against the five banks, he said, BoG was mandated by law to promote the safety, soundness and stability of the financial system and to protect the interest of depositors.

Dr Addison said in the implementation of that mandate, BoG identified weaknesses and legacy problems that had emerged in the banking sector, leading to a significant build-up of vulnerabilities which required stringent measures to address in order to restore the stability and resilience of the financial system.

He identified these weaknesses as caused by macroeconomic factors, while the others were due to a trend of poor corporate governance, poor risk management practices, related party transactions that are not above board, regulatory non-compliance and poor supervision which overlook questionable licensing processes  and weak supervision.

Dr Addison outlined the results of BoG’s investigations into the five collapsed banks as follows:


A KPMG Report on UniBank concludes that UniBank is balance-sheet insolvent and that the Bank is implicated in serious corporate governance, risk management, compliance and management flaws as well as unlawful transactions involving shareholders, related parties and connected parties.

According to the KPMG Report, as at May 30, 2018, UniBank was insolvent, with a capital deficit of GHC 7.4 billion, as against the regulatory minimum of GHC400 million, and a capital Adequacy Ratio(CAR) of negative 74.65 per cent, compared to the regulatory minimum of 10 percent.

The KPMG Report also shows that Unibank is also cash flow insolvent, given that a significant portion of its assets are locked up in interest-free loans and other advances to its  shareholders and related parties.

The Royal Bank

According to an on-site examination conducted by BoG on March 31, 2018, the Royal Bank is insolvent and faced with acute liquidity challenges, having suffered severe capital impairment due to underprovisioning for loans, over estimation of investments with other financial institutions and the overstatement of capital on account of fixed assets which were rejected by BoG for capital purposes.

The Biege Bank Limited

A special examination conducted by BoG into the affairs of Beige Capital, six months after the commencement of its operations in December 2018, revealed that funds purportedly used by the bank’s parent company to recapitalize were sourced from the bank through an affiliate company and in violation of regulatory requirements for bank capital.

The examination also revealed that Royal Bank persistently breached the Cash Reserve Requirement (CRR) of 10 percent since the beginning of January 2018; that the quality of the bank’s loan portfolio had seriously deteriorated, resulting in a Non-Performing Loans (NPL) Ratio of 72.80 percent; that the bank’s capital Adequacy Ratio (CAR) was assessed to be negative 17.18 percent as against the regulatory minimum of 10 percent, thus recording a capital deficit of GHC 159,162,557.64, rendering the bank insolvent

Sovereign Bank Limited

BoG’s investigations have established that Sovereign Bank is insolvent, with no reasonable prospect of a return to viability; is unable to meet daily obligations as they fall due; that the bank has not been able to publish its audited Accounts for the year ending December 2017, breaching section 90 (2)of the Banks and Deposit-Taking Institutions Act, 2016(Act 930; and other key regulatory requirements and prudential limits.


The Construction Bank Limited

In the course of the official administration of Unibank, BoG discovered that the initial minimum paid up capital of the bank provided by its promoter/shareholder was funded by loans obtained from the National Investment Bank (NIB) Limited (GHC34 million) and Unibank Ghana Limited (GHC 61 million), contrary to section 8 (d) of Act 930.

The BoG investigations also established that an amount of GHC 80 million out of the amounts reported as the bank’s paid-upcapital and purportedly placed with NIB and UniBank remains inaccessible to the bank; and that the Construction Bank’s inability to inject additional capital to restore its capital adequacy to the minimum capital of GHC120 million required at the date of licensing threatens the safety of depositors’ funds and the stability of the banking system.

Source: ISD (G.D. Zaney, Esq.)

Created: 02 August 2018
Hits: 2813