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Here are 10 reasons why BoG took over uniBank

Dr. Ernest Addison, BoG Governor

The Bank of Ghana (BoG) today, Tuesday March 20, 2018, announced that it has taken over the management of uniBank, by appointing an administrator,  KPMG, to run the indigenous bank.

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

Here are the 10 major reasons why the central bank took over uniBank.

1. uniBank persistently maintained a capital adequacy (CAR) ratio below zero (currently negative 24%), making it technically insolvent. This contravened the 10% minimum CAR required.

2. uniBank 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.

3. uniBank conducted its credit administration in a manner that has jeopardized the interests of depositors and the financial sector as a whole.

4. uniBank failed to comply with a directive of the Bank of Ghana dated 26th October, 2017, under section 105 of Act 930, prohibiting the bank from granting new loans and incurring new capital expenditures.

5.uniBank failed to comply with several other regulatory requirements, including  Lending to a number of borrowers in excess of its regulatory lending limit (single obligor limit).

6. uniBank was borrowing from the inter-bank market without the written approval of the Bank of Ghana when its CAR was less than the prescribed ten percent (10%), in breach of the BoG laws.

7. uniBank was outsourcing a number of services such as those of tellers, receptionists, and security, to affiliate companies without the prior approval by the Bank of Ghana, contrary to BoG Laws.

8. uniBank refused to cooperate with the Bank of Ghana in the performance of its supervisory responsibilities, including deliberately concealing some liabilities from its balance sheet, and failing to submit documents and records for supervisory inspection.

9. uniBank was engaged in poor corporate governance and risk management practices which rendered the bank vulnerable to macroeconomic shocks.

10. uniBank was generally conducting its affairs in a manner detrimental to the interests of depositors and the financial system as a whole.

By: Lawrence Segbefia/citibusinessnews.com/Ghana

One comment

  1. James Shisui Badu

    I am no Expert but I strongly think it is time the BoG introduces what is called the “Transaction Verification Code-(TVC)” into the Financial Environment especially in our Banking sector. I think the main issue in the Banking sector now is inaccurate data sent to the BoG by top managers. This always mislead the BoG officials. In-fact, there are several reasons top managers will always present inaccurate data to their supervisors (Which I will skip for now). Let me concentrate on TVC.
    Think of TVC as a barcode, or serial number, or a simple phone number, or a name. These are unique numbers. This identify a product, an activity, a connection (network) or a person respectively. All Banks have these numbers generated after a transaction is made by their Banking Software. At times these are part of the SMS sent to the client. These special codes helps the Bank make audit and understand each transaction from another. This special numbers are in the control of the Bank only and not the Central Bank.
    In times of reporting to the BoG, a bank can manipulate its database to match their case as expected (painting a positive picture). The BoG is only made known of the actual cases most atimes when the Bank becomes naked (where it can not fulfill its Liabilities).
    I think the simple approach to avoid this challenge is to transfer the Ownership of TVC from Banks to the BoG. In other words, every transaction made by a Bank must have a TVC generated and/or verified by the BoG. This will include Deposits, Withdrawals, Loans given, Loans Payments, etc. That is, the BoG will have the same vital primary data as that of the Banks. In simple words, BoG can get accurate data as at when it is required. Banks that report inaccurate data can easily be identified and necessary actions taken when required. Client confidence in the Banking sector will be positive since they can accept the fact the their funds are monitored by BoG.
    If this is approach is accepted, we must prepare for implementation. There are multi-methods to implement this approach. We just have to think ahead and settle on one. We may consider these methods;
    1: API’s to be designed and shared with the BoG by the Banking Application Vendors.
    2: API’s or special verification system to be designed by BoG and shared with Banks to integrate in the Banking Applications.
    In each case, the TVC must be made available to clients per their transactions with the Bank. A platform must be made available for client to verify the TVC with the Central Bank anytime. The Central Bank will have a responsibility to identify vital data that is required for the API design (Please understand that the BoG will not reinvent or monopolize Banking Applications. This is not the purpose).
    We must understand that our Banking laws are limited and must take necessary steps to amend them accordingly to take care of Technological changes. I am positive that the Financial sector will surely be effective if we adopt some technological measures to face the challenging times.

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