Commenting on the BoG’s takeover of uniBank, the 2nd Deputy Governor of the Bank of Ghana, Elsie Awadzi, said the public need not fear for the collapse of more banks.

[contextly_sidebar id=”ITcwxTmplDpfX8o7KCu6wei9lMFuMsFT”]“The public should remain calm. There are no problems anywhere else other than what we know about already,” she stated on the Citi Breakfast Show.

“I’d like to reiterate the fact that banking sector is strong, sound and safe. The public need not worry or panic. Everything is fine. We encourage everyone to be calm and continue normal banking operations with all the banks. The banks are fine.”

uniBank’s insolvency follows the total collapse of UT Bank and Capital Bank in August 2017.

The latter two 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.

uniBank’s problems

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

The Central Bank indicated that uniBank’s problems were part of the legacy issues in the financial sector attributed to weak economic growth and poor corporate governance and risk management practices.

Elsie Awadzi noted that though uniBank was “severely undercapitalised” it had submitted a satisfactory roadmap to get back on track, hence the BoG’s indulgence.

But when it became clear the bank’s situation was getting worse, the BoG had to step in to save it from an outright collapse.

Aside from all this, 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.

Despite these failings, Elsie Awadzi said the other banks cited in the review exercise are doing fine and were under strict monitoring to prevent similar occurrences.

“The other banks were fine. They all submitted their capital plans, their liquidity plans and they are all being implemented and we have no concerns with any of those. So everything is fine. We then began to put them under stronger surveillance to ensure that they were doing the right things as they had committed to do… we have checked the other banks under strong monitoring and we have no cause to believe that any other numbers were not right.”

The takeover

The BoG appointed audit firm KPMG Ghana as the administrator of uniBank when it announced it had taken over  management.

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.

–

By: Delali Adogla-Bessa/citifmonline.com/Ghana

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The ambitious business strategy was revealed by MTN CEO Rob Shuter yesterday during the Deloitte Africa in 2018 Outlook conference in Woodmead.

The company is encouraged by the progress made by its Mobile Money offering in other geographies that it operates in. This is despite MTN Mobile Money failing to gain traction in the South African market, with the telco eventually killing it off in 2016 due to lack of commercial viability.

MTN Mobile Money allows anyone with a mobile phone to send and receive money quickly, safely, affordably and conveniently.

“The core digital service that we have decided to put our money on is Mobile Money,” said Shuter. “Mobile Money is really about leveraging the strength of the brand and leveraging the strength of the distribution because we have built a huge informal distribution network for prepaid airtime to bring customers into a transactional banking system.”

He pointed out that MTN has deployed Mobile Money across 14 markets and “if we look at our 30-day active users, which is the most important matric, we are growing by half a million customers a month. I think that’s pretty cool and today we are sitting at 21 million subscribers.

“We are a new age transactional banking provider and it’s a very big imperative for us, and the key thing we want to do is to scale it rapidly.”

According to Shuter, MTN wants to build Mobile Money into a 60 million customer business in the next three to four years.

“We will be the largest bank in Africa, leveraging scale, network, brand, infrastructure and distribution,” he noted.

More opportunities

Detailing the company’s other plans, Shuter said he is upbeat about the economies of Africa and the Middle East, where the telco has operations.

“We are very optimistic about what we see. For us, we see more opportunities than challenges. We see the need to focus on our core geographies and this is partially because this is where we see the growth. We see Asia-Pacific as the fastest growing economy but Middle East and Africa are also following suit.”

MTN looks at the market in terms of three core customer segments – consumer, enterprise and wholesale, Shuter pointed out.

“If we look at consumer, what’s quite inspiring for us, looking at our geographies, is we have a population of about 650 million people across the 22 markets we operate in. In the next three to four years, that 650 million people is going to grow to 700 million people. An increase of 50 million people is the same as adding another South Africa to the portfolio.

“So that gives us a lot of opportunity, actually still in the traditional voice business – SIM penetration, voice, handsets, SMS, etc.”

The three biggest markets for MTN are SA, Nigeria and Iran, Shuter said, adding the economic conditions are improving. “In Nigeria, oil prices are coming back and inflation is coming under control. South Africa is also witnessing winds of change politically, while Iran is a market that is opening up, particularly to Europe, despite the rhetoric that we hear from the US.”

He said the other aspect that defines the market is the low level of Internet and digital services.

“When you look at the adoption of mobile Internet, we are talking 20% to 30% of these markets. These are markets with born-digital youthful populations – these are people who were introduced to the Internet on a mobile device.”

He believes there is also potential for the adoption of digital services – Mobile Money, media, entertainment and social media.

“So there are a lot of positives in the consumer side of the business. If we are looking at the market size, we are looking at R500 billion to R600 billion in all the geographies that we operate in; that’s about two-thirds of the market. If you want to be successful for the long run in our industry, you have to be very well-positioned in the consumer market in terms of brand, products, network, technology, resources, etc.”

Enterprise push

Regarding the enterprise market, Shuter said it’s valued at R210 billion and growing 8% year-on-year.

“For sure, we have to be successful in the consumer segment because that’s the biggest segment but for an operator like us, a push in the enterprise sector can make a very big difference. It’s a large market with decent growth.

“In fact, of that R210 billion market, about 60% is just in pure connectivity and most of that is purely mobile. On top of that, there is rapid adoption of new technologies like unified communications, machine-to-machine, Internet of things and connected devices.”

Speaking about the R30 billion wholesale market, Shuter said MTN is looking to tap into services like roaming to boost its revenue.

“Wholesale is about telcos selling to telcos. So telcos and mobile operators across those geographies build networks in-country but they still need to connect to other networks and they need to find a way to get their traffic either up into the sky to satellites or to the edge of Africa and connect it to an undersea cable for international traffic. So we are also looking to take advantage of this.”

Credit: MTN Africa

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Finance Minister, Ken Ofori-Atta during the presentation of the 2018 Budget in parliament last Wednesday announced that government will launch a National Development Bank to focus on the Agricultural and Industry sectors.

[contextly_sidebar id=”rA4q9ECVbKcs3oaWcLloPlfGU1PoFuXg”]Mr. Ken Ofori-Atta also stated that government is planning to launch the National Development Bank with a seed capital of 500 million US dollars.

Sources tell Citi Business News government intends to launch the bank in December or early 2018 to provide cheap credit to players in the agricultural and industrial sectors of the economy.

The adb was formed to focus on investing in the agricultural sector but the bank has seen less investment into the sector.

NIB has also struggled to fulfill its main responsibility of investing in the industry sector.

Meanwhile, Economist and Head of the Economics Department at the University of Ghana, Professor Peter Quartey has lauded government’s decision to launch a National Development Bank.

“The current system where adb, NIB are not giving the sectors the needed finance, we need to create a new bank that will serve that purpose. Ideally we should reform the existing ones but its proven difficult, therefore we need to create a new development bank that would be very focused, will have a special need, will have special focus to ensure that credit goes to agric and manufacturing and these are the two critical sectors of the economy that will create jobs for our youth,” he explained.

Prof. Quartey was of the view that the view will help address challenging of funding those sectors.

–

By: Lawrence Segbefia/citibusinessnews.com/Ghana

The post Gov’t to merge adb, NIB into National Development Bank appeared first on Citi 97.3 FM - Relevant Radio. Always.

The amount constitutes 1,001 fraud incidents in 2016 reported to the Bank of Ghana (BoG).

The bank investigated and analysed fraud and defalcation reports received from financial institutions.

These cases were received from universal banks, Non–Bank Financial Institutions (NBFIs), and Rural and Community Banks (RCBs).

This is contained in the 2016 annual Payment Systems Oversight report published by the BoG.

Main fraud cases

The main fraud cases reported were suppression of customer accounts by staff of financial institutions, card fraud, forgery and alteration of documents, manipulation of accounts, and negotiable instruments.

Others included fraudulent collection of international remittances by persons not named as recipients, transactions involving cloned and stolen cheque, and fraudulent transfers through hacked email accounts, the report added.

1,529 Complaints from general public

The report also revealed that a total of 1,529 complaints were received from the general public with respect to banking business.

1,362 Cases against Non-Bank Financial Institutions

Out of this total, the report said 1,362 cases were complaints made by customers of Non-Bank Financial Institutions, especially microfinance institutions.

Twenty complaints were received from customers of Rural and Community Banks.

According to the report, the remaining 140 cases were reports from customers of universal banks and other financial institutions.

Types of complaints against banks

BoG explained that the complaints received from the public covered aspects of banking service delivery such as unauthorised withdrawals from customer accounts, especially through internet banking, payment of international remittances to persons other than the intended beneficiaries, and ATM-related disputes.

50% of Complaints about non-payment of customers’ investments upon maturity.

The report also revealed that complaints against financial institutions, particularly NBFIs and microfinance companies, which failed to pay customers’ investments upon maturity accounted for more than 50 per cent of the complaints received in 2016.

According to BoG, the complaints were investigated, with outcomes, decisions or rulings made communicated to the aggrieved parties.

The bank continued to monitor the implementation of its decisions on complaint issue until final resolution is achieved.

–

Source: The Finder

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“I think the Bank of Ghana is going about it the right way,” he said to Citi News after the BoG announced a thorough investigation of operations of UT Bank and Capital Bank.

[contextly_sidebar id=”40Qdu9MUp8iCaeT3myYed7M2hSPyHOop”]The central bank said appropriate action will be taken against shareholders, Directors, and key a Management personnel who are found to be culpable in the collapse of the banks.

Ensuring accountability in the wake of the collapse of these banks is the prudent next step, according to Mr. Thompson, given there has been some form of negligence.

“If for example, all the money has been lost because they invested it businesses that fail, that is fair. But if the money has been lost because of negligence then, of course, somebody has to be held accountable because it’s not right. You can’t take my money, squander it and then go away Scott free.”

“So I think that if individuals or institutions are found to be culpable or involved directly or indirectly in contributing to the Bank’s failure then I think they should be held accountable… if Dalex Finance collapses because I have taken investors money and put in my pocket, I should be held responsible and that is standard practice.”

Fallout from collapse

Deposits of customers of the two banks will be protected by the government as their takeover by GCB Bank is finalized.

The inability of the banks to turn around their negative capital adequacy position led to their collapse and necessitated a Purchase and Assumption agreement allowing GCB Bank to take over all deposit liabilities and selected assets of both UT Bank and Capital Bank, per section 123 of the Banks and Specialised Deposit-Taking Institutions (SDIs) Act, 2016 (Act 930).

However, the BoG has indicated that the shareholders of Capital Bank will not be compensated. The same may apply to UT Bank shareholders, though the central bank is considering compensating shareholders listed on the Ghana Stock Exchange.

Top level management of the two banks, including the Managing Directors, will lose their jobs. It is unclear the fate of the other workers of the two banks, numbering close to 2,000 in total, but negotiations are in place to protect those who want to still work for the distressed banks.

Possible negligence

Research indicated that UT Bank in a precarious position given it was found to be the riskiest bank in Ghana listed on the stock exchange.

The situation with Capital Bank has been found to be more nefarious given the existence of a leaked 2014 memo indicating that the bank, then First Capital Plus Bank, was on the verge of collapse.

The bank’s Chief Executive Officer at the time even described the situation as a “time bomb.”

The August 2014 memorandum, signed by the CEO of the Bank at the time, John Kofi Mensah, warned that Capital Bank had capitalization issues and may not be able to meet its obligations to its clients.

The memo addressed to the Board of the Bank, also outlined cases of mismanagement that had compromised their shareholder’s credibility.

–

By: Philip Nii Lartey/Delali Adogla-Bessa/citifmonline.com/Ghana

The post Banks collapse: BoG’s actions appropriate – Ken Thompson appeared first on Citi 97.3 FM - Relevant Radio. Always.

An internal report has confirmed the difficulties of the First Capital Plus Bank and it is being published unedited for the benefit of our readers;

FIRST CAPITAL PLUS BANK LIMITED
CONFIDENTIAL REPORT
PRESENTED BY THE BOARD SPECIAL COMMITTEE TASKED TO ENQUIRE INTO TPF AND TO SEGREGATE LIABILITIES
1.0 INTRODUCTION
2.0 MEMBERS OF THE COMMITTEE
3.0 TERMS OF REFERENCE
4.0 METHODOLOGY
4.1 DOCUMENTS REVIEWED
4.2 RESOURCE PERSONS USED
4.3 WITNESSES CALLED
4.4 CONCESSIONARY BASIS FOR CONCLUSIONS
5.0 FINDINGS OF FACT
6.0 CONCLUSIONS
7.0 RECOMMENDATIONS
8.0 CLOSING
9.0 ANNEXURES

1.0 INTRODUCTION
1.1. The Board of Directors on the 18th September, 2014 constituted a three (3) man special committee out of its membership to probe into the Third Party Funds, and to segregate liabilities of persons and/or individuals when appropriate.

2.0. MEMBERSHIP OF THE COMMITTEE
i. Alhaji Amadu Montia-Chairman
ii. Rev Fitzgerald Odonkor-Member
iii. Mr Micheal Amankwah-Member

3.0 TERMS OF REFERENCE
i. To ascertain the full extent of the TPF
ii. To segregate liabilities and apportion same to persons liable thereunder

4.0. METHODOLOGY
4.1 DOCUMENTATION REVIEWED
4.1.1 The Committee obtained and reviewed the following documents:
i. TPF and Non TPF-Historical Developments-prepared by Mr William Ato Essien
ii. Evidence of treatments on the Bank’s books of payments that went into procuring assets for the Bank, i.e., non TPF payments by the Bank.
iii.Source documents of TPF transactions printed out of the Bank’s books.
iv. Fixed Deposit Certificate of Investment claims made by individuals and other financial institutions that did not reflect in the Banks books.
v. Evidence of correspondences and advise letters evidencing various TPF transactions.
vi. Statement of accounts of Liberty Financial Services.
vii. Statement of accounts of FCP Trust.
vii. Statement of accounts of SIC-FSL with FCP
ix. Statement of accounts, Twenty First Century Construction Limited
x. Historical schedule of interest rates on TPF
xi. Various computations and compilations by both the witnesses and resource persons.

4.2. RESOURCE PERSONS USED
4.2.1 The Committee used the services of the Bank’s General Managers in charge of Finance & Strategy and Treasury.
4.2.2. The Bank’s Internal Auditor also provided some assistance.

4.3 WITNESSES CALLED
4.3.1. The Committee invited and took evidence from the following persons.
i. Mr William Ato Essien
ii. Dr Stephen Enchill
iii.Mr Isaac Osah Thompson-Mensah
iv. Mr John Kofi Mensah

4.4 CONCESSIONARY BASIS FOR THE COMMITTEE’S CONCLUSIONS
4.4.1. The Committee proceeded to work and to reach the various conclusions it reached based on some clear understanding and agreements among the various witnesses who appeared before it.

4.4.2. The total figure presented by Mr. Essien in his paper titled TPF and Non TPF-historical developments, was accepted as a true reflection of receipts and expenditure as claimed in the said paper. Interests were also calculated at the prevailing interest rates at the particular periods of the receipts of the said monies and credited to Mr Essien. Finder’s fees of about Four Million Ghana Cedis on all monies received and used as capital for FCP was also credited to Mr Essien.

4.4.3. Additional liabilities paid from Mr Essien’s Five Million Ghana Cedis payment to FCP were reversed and the said payment treated as credit to him.

4.4.4. Expenditure incurred on attracting J.K Mensah into FCP was treated as expenditure against FCP.

4.4.5. Expenditure incurred on incorporating FCP, Protocols, Preference Shares and other miscellaneous were all treated as expenditure against FCP and debited to shareholders.
4.4.6. Three other individuals were also identified as having some debits standing in their names which they personally have to redeem.

5.0. FINDINGS OF FACT
5.1 After reviewing the various documentations, taking evidence from the Witnesses and listening to the resource persons, the Committee established:
i. That some expenditure items incurred at the incorporation of FCP reflect in the Bank’s records.

1. That there were other expenditure items that do not reflect in the Bank’s records.
   iii. That there were no documentary evidence for most of the expenditure made in the name of the Bank.

1v. That some individuals and institutions had made various deposits with the Bank which did not reflect on the Bank’s books.

1. That various persons had contracted personal liabilities which the Bank had either redeemed out of its own resources or which were still standing in the name of the Bank.
   vi. That some of the Bank’s investments with other institutions had been used to off-set some personal liabilities.

vii. That part of the purchase price of the Labone Property and expenditure on the Tesano office renovations were incurred from the Bank’s books.

viii. That huge expenditure overheads were made in the name of protocol with no records to substantiate.

5.2 The Labone Property
ix. That the total cost of the Labone property was USD 3 million, out of which an amount of GHS 2 million being part payment thereof was paid from the Bank’s resources.

1. An account in the name of Liberty Financial Services was opened as the medium for the payment of the said amount, and in favour of Mr. Patrick Sarpong, representative of the Transferor of the Labone Property.
2. In total, an amount of about GHS 5.8 Million went through the said account. The Committee however got confirmation from FCP’s Finance Department that the GHS 2,000,ooo.00 payment was specifically for the purchase of the Labone Property. There were no confirmations for the other transactions on the said accounts. Suffice to say, some of them were credit interest and payments of interest on investment. (see Appendix k series page 28).

xii. The committee also chanced upon a demand notice by Minka-Premo&Co. Solicitors, acting on behalf of Mr. Patrick G.A Sarpong, who was the Lawful Attorney of the Vendor of the said property to FCP. In the said letter, they were making a demand on some investments their clients had with FCP. (see Appendix I series page 23).

xiii. The Committee then requested for further information from the said Solicitors on how his client’s monies were paid. However, they were unable to provide any information with regards to the said request.

6.o CONCLUSIONS
6.1 The Committee reached various conclusions with regards to individuals and corporate liabilities. These conclusions were reached in agreement with all the witnesses which could prove detrimental to their interests. The following conclusions were reached:
i. A total amount of GHS 136, 726,101.00 was identified as TPF
ii. Out of the said amount, GHS 56,788,289.00 was to be debited to shareholders.
iii. GHS 1,557,089.00 was to be debited to Mr Ossah.
iv. GHS 1,245,671.00 was to be debited to Dr. Enchill
v. GHS 77,135,052 was to be debited to Mr Essien.
vi. In the absence of any superior evidence to the contrary, The Labone land, title deeds of which is currently in the custody of Mr. Essien could have been paid for partly by him, perhaps from TPF or his own resources.
6.2 The liability of shareholders in proposition to their shareholdings, as per the amount standing against shareholders ( the former shareholding structure before the David Goldman share transfer is herby applicable)

Name of shareholder %of shares Liability
1. Mr Willaim Ato Essien 52 29,529,910.28
2. Dr Stephen Enchill 11 6,246,711.79
3. Mr John Kofi Mensah 10 5,678,828.90
4. Otabil& Associates Rep
by Dr. M. Otabil 7 3,975,180.23
5. Isaac Osah Thompson-Mensah 5 2,839,414.45
6. Mr. Kinsley Attah Ghansah 5 2,839,414.45
7. Mr Isaac Oheneba Osei Akoto 5 2,839,414.45
8. International Gospel Church
rep, by Dr Mensah Otabil 3 1,703,648.67
9. Rev. Edwin Obeng Donkor 2 1,1135,765.78
Total 100 56,788,289.00

7.0 RECOMMENDATIONS
7.1 The Committee makes the following recommendations;
i. That all amounts identified as standing in the names of individuals should be paid within 7 days of a formal demand made on them. This is inclusive of various liabilities shown in the table above.

1. In default of (i) above, steps should be taken to compel payment including without limitation the attachment of shares in the Bank of such persons.

iii. That subject to any contrary information that will become apparent after the Committee’s work, Mr William Ato Essein be allowed to keep the Labone Property upon the payment to the Bank of an amount of GHS 5,190,295.97 being the sum total of the GHS 2,000,000.00 paid from FCP’s accounts and interests accruing thereon at the prevailing interest rates (see Appendix j page 27).
The said amount should also be paid within 7 days of a formal request made for that purpose.

1. In default of (iii), further shares should be attached and/or personal properties attached to discharge the said liability.

8.0 CLOSING
8.1 The Committee expresses its gratitude to the Witnesses and the Resource Persons for the times spent with the Committee, the documents presented for its review and the various concessions made and understandings reached which made the Committee’s work smooth.

–

Source: The Insight Newspaper. Thursday, 22 January 2015

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A memorandum signed by the Chief Executive Officer of the Bank, Mr John Kofi Mensah claims that it may not be able to meet its obligations to its clients.

The memorandum addressed to the Board of the Bank spells out numerous cases of mismanagement and corruption.

The full text of the memorandum dated 11th August, 2014 is published below;

BOARD MEMO

FROM: CHIEF EXECUTIVE OFFICER

TO: CHAIRMAN AND MEMBERS, BOARD OF DIRECTORS

DATE: AUGUST 11, 2014

URGENT ACTION TO SALVAGE THE REPUTATION AND FORTUNES OF FIRST CAPITAL PLUS BANK

I write to reiterate my earlier concerns and request for the Board to act with expedition and take drastic and urgent steps to resolve the seemingly intractable problems that have bedevilled and continue to dog the growth and our efforts to stand the bank on its feet till date.

We have discussed these issues at length, but we do not seem to have made any significant progress as exemplified by the fact, among others, that a recent 3 man committee we set up to come up with some solutions appear to have been still born. We also appear to be perfecting the art of crafting long -winding resolutions which are not backed by any serious follow-up action.” I perceive that we are very conversant with and know very well the problems that confront, but lack the critical boldness and courage to tackle the bull by the horns. With respect, we all appear to be guilty of fiddling while Rome burns.

As the CEO, coupled with my interests as a shareholder of the Bank, I wish to set the ball rolling by shaking myself out of the self-imposed slumber that we all find ourselves. I think that I cannot do less than be in the forefront and spearhead the efforts to grow the Bank and move it to the next level to the path of joining the ranks of the foremost financial institutions in the country. The clarion call has assumed some urgency due in part to the attempt by the Government/Bank of Ghana to pass into law the Depositors Protection Bill and the Deposit Taking Institutions Bill which would, among others, oblige every Director of a Bank to report to the Bank of Ghana if he has reason to believe that a Bank of which he is a director cannot meet its future obligations on pain of criminal sanctions.

In short, transparency, candour and diligence in prosecuting a bank’s object of an incorporation is no longer a matter of personal ethics, but have been raised to an obligatory statutory duty with
sanctions to boot. We can therefore not have the luxury of going on with our duties as ‘business-as usual’. On the contrary, we are being compelled to move forward.

From my perspective, the issues that require urgent action appear to be:

1.0  Our inability to establish offshore counterparty relationships due to issues with shareholder’s credibility.

2.0 On top of this issue is our continuing inability to establish offshore counterparty relationships with other banks and financial institutions. As we are all undoubtedly aware, this problem has arisen and persists as a direct consequence of outstanding and unresolved issues hovering around shareholders of the bank. The Deutsche Bank and others have, after conducting due diligence on the bank, rejected our request for business relationship with them. We all know and agree that this type of business relationship constitute one of the essential life lines for the Bank. Als long as this problem persists, we cannot reasonably expect to grow outside the boundaries of this country. This will undoubtedly lead to stunted growth and spell doom for the bank in the long run. Unfortunately as the issue is, I am sorry to state that we have dithered for far too long on this matter and require to act forthwith.

3.0 Unresolved TPF and capitalization issues.

3.1  This is a long standing issue and needs no further clarification.

4.0 Increasing interest expense and general costs of doing business

4.1  This has been the bane of the bank for some time now, that while management is embarking on a desperate and aggressive deposit mobilization to shore up liquidity to cover holes in the balance sheet, it is resulting in increased interest expense and general costs to us. This is detrimental to our profitability drive and the same is unsustainable.

5.0 Potential TPF and Related Costs

Decisions on some emerging liabilities which are potential TPF remain outstanding

6.0 For the above and other reasons, I hereby outline the following as urgent steps that the Board ought to ensure to save the Bank from any further casualties.

• Acceptance of debt liability created through non-conventional practices and a delivery of a re-imbursement plan that will not create any further liquidity strain for the Bank.
• Proper capitalization of the Bank since deposits with other Banks is not backed by actual liquidity.
• On the first issue above, I see the solution as a simple one: The shareholders must accept to have their shares held in trust for them. The only other option, as far as I can see, is that they remain and we get stuck in the tunnel, with the inevitable consequence that this may explode in our faces sooner than later.
• Full disclosure of any and all potential liability created by any shareholder to avoid further surprises as has been the case lately.
• Concrete steps to salvage the reputation of the Bank and prevent any further market and reputational risks.
• Decisions Board must be implemented without further delay.

7.0 I regret to mention that unless we act ourselves and so with all the promptitude that it deserves, things may go out of hand, including the possibility that the Bank of Ghana may step in, by which time it will be too late for us to make excuses, with all of us risking sanctions (though I fervently hope that we act with expedition and seriousness to avoid that possibility).

8.0Accordingly, I think that we are all sitting on a time bomb and cannot afford to spend too much time in drawing a road map based on the proposals outlined here. I would think that we should be able to accomplish this assignment within three weeks from now.

9.0 Of course, the Board’s acceptance or otherwise of my proposals would go a long way to assist my interpretation of the Board’s willingness to share in my vision for the Bank and its customers at large. I will certainly interpret that as a vote of no confidence in my ability to steer the bank to its destination with your respective backing and cooperation.

Submitted for the board’s action.

–

Source: The Insight Newspaper

The post The Insight’s 2015 revelation: First Capital Plus Bank is collapsing appeared first on Citi 97.3 FM - Relevant Radio. Always.

The Insight Newspaper obtained information indicating that the Capital Bank, then First Capital Plus Bank, was on the verge of collapse with the bank’s Chief Executive Officer describing the situation as a “time bomb.”

[contextly_sidebar id=”MTVQjPhpb2N8yxFhI1avhJTWM9I8gaFi”]Following the collapse of UT Bank and Capital Bank, and their takeover by GCB Bank, because of the inability of the two banks to turn around their negative capital adequacy position, this memo has resurfaced adding more context to Capital Bank’s collapse.

The August 2014 memorandum, signed by the CEO of the Bank at the time, John Kofi Mensah, warned that Capital Bank had capitalization issues and may not be able to meet its obligations to its clients.

“I regret to mention that unless we act ourselves and so with all the promptitude that it deserves, things may go out of hand, including the possibility that the Bank of Ghana may step in, by which time it will be too late for us to make excuses, with all of us risking sanctions,” the memo stated.

Mr. Mensah also stated that he would regard any non-action on his warnings a vote of no confidence in his vision for the company.

“…the Board’s acceptance or otherwise of my proposals would go a long way to assist my interpretation of the Board’s willingness to share in my vision for the Bank and its customers at large. I will certainly interpret that as a vote of no confidence in my ability to steer the bank to its destination with your respective backing and cooperation.”

The memorandum addressed to the Board of the Bank also outlined cases of mismanagement that had compromised their shareholder’s credibility.

Find the full memo below

BOARD MEMO

FROM: CHIEF EXECUTIVE OFFICER

TO: CHAIRMAN AND MEMBERS, BOARD OF DIRECTORS

DATE: AUGUST 11, 2014

URGENT ACTION TO SALVAGE THE REPUTATION AND FORTUNES OF FIRST CAPITAL PLUS BANK

I write to reiterate my earlier concerns and request for the Board to act with expedition and take drastic and urgent steps to resolve the seemingly intractable problems that have bedevilled and continue to dog the growth and our efforts to stand the bank on its feet till date.

We have discussed these issues at length, but we do not seem to have made any significant progress as exemplified by the fact, among others, that a recent 3 man committee we set up to come up with some solutions appear to have been still born. We also appear to be perfecting the art of crafting long -winding resolutions which are not backed by any serious follow-up action.” I perceive that we are very conversant with and know very well the problems that confront, but lack the critical boldness and courage to tackle the bull by the horns. With respect, we all appear to be guilty of fiddling while Rome burns.

As the CEO, coupled with my interests as a shareholder of the Bank, I wish to set the ball rolling by shaking myself out of the self-imposed slumber that we all find ourselves. I think that I cannot do less than be in the forefront and spearhead the efforts to grow the Bank and move it to the next level to the path of joining the ranks of the foremost financial institutions in the country. The clarion call has assumed some urgency due in part to the attempt by the Government/Bank of Ghana to pass into law the Depositors Protection Bill and the Deposit Taking Institutions Bill which would, among others, oblige every Director of a Bank to report to the Bank of Ghana if he has reason to believe that a Bank of which he is a director cannot meet its future obligations on pain of criminal sanctions.

In short, transparency, candour and diligence in prosecuting a bank’s object of an incorporation is no longer a matter of personal ethics, but have been raised to an obligatory statutory duty with
sanctions to boot. We can therefore not have the luxury of going on with our duties as ‘business-as usual’. On the contrary, we are being compelled to move forward.

From my perspective, the issues that require urgent action appear to be:

1.0  Our inability to establish offshore counterparty relationships due to issues with shareholder’s credibility.

2.0 On top of this issue is our continuing inability to establish offshore counterparty relationships with other banks and financial institutions. As we are all undoubtedly aware, this problem has arisen and persists as a direct consequence of outstanding and unresolved issues hovering around shareholders of the bank. The Deutsche Bank and others have, after conducting due diligence on the bank, rejected our request for business relationship with them. We all know and agree that this type of business relationship constitute one of the essential life lines for the Bank. Als long as this problem persists, we cannot reasonably expect to grow outside the boundaries of this country. This will undoubtedly lead to stunted growth and spell doom for the bank in the long run. Unfortunately as the issue is, I am sorry to state that we have dithered for far too long on this matter and require to act forthwith.

3.0 Unresolved TPF and capitalization issues.

3.1  This is a long standing issue and needs no further clarification.

4.0 Increasing interest expense and general costs of doing business

4.1  This has been the bane of the bank for some time now, that while management is embarking on a desperate and aggressive deposit mobilization to shore up liquidity to cover holes in the balance sheet, it is resulting in increased interest expense and general costs to us. This is detrimental to our profitability drive and the same is unsustainable.

5.0 Potential TPF and Related Costs

Decisions on some emerging liabilities which are potential TPF remain outstanding

6.0 For the above and other reasons, I hereby outline the following as urgent steps that the Board ought to ensure to save the Bank from any further casualties.

• Acceptance of debt liability created through non-conventional practices and a delivery of a re-imbursement plan that will not create any further liquidity strain for the Bank.
• Proper capitalization of the Bank since deposits with other Banks is not backed by actual liquidity.
• On the first issue above, I see the solution as a simple one: The shareholders must accept to have their shares held in trust for them. The only other option, as far as I can see, is that they remain and we get stuck in the tunnel, with the inevitable consequence that this may explode in our faces sooner than later.
• Full disclosure of any and all potential liability created by any shareholder to avoid further surprises as has been the case lately.
• Concrete steps to salvage the reputation of the Bank and prevent any further market and reputational risks.
• Decisions Board must be implemented without further delay.

7.0 I regret to mention that unless we act ourselves and so with all the promptitude that it deserves, things may go out of hand, including the possibility that the Bank of Ghana may step in, by which time it will be too late for us to make excuses, with all of us risking sanctions (though I fervently hope that we act with expedition and seriousness to avoid that possibility).

8.0Accordingly, I think that we are all sitting on a time bomb and cannot afford to spend too much time in drawing a road map based on the proposals outlined here. I would think that we should be able to accomplish this assignment within three weeks from now.

9.0 Of course, the Board’s acceptance or otherwise of my proposals would go a long way to assist my interpretation of the Board’s willingness to share in my vision for the Bank and its customers at large. I will certainly interpret that as a vote of no confidence in my ability to steer the bank to its destination with your respective backing and cooperation.

Submitted for the board’s action.

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By: citifmonline.com/Ghana

The post Former Capital Bank CEO’s 2014 memo predicting collapse appeared first on Citi 97.3 FM - Relevant Radio. Always.

The then running mate of the flag bearer of the New Patriotic Party’s warning is back in the public mind after the collapse of UT Bank and Capital Bank and their takeover by GCB Bank.

[contextly_sidebar id=”qzIPl7kwNlb2ffOK0zpa2ype4OXllIKH”]He said these eight banks were identified to exhibit significant weaknesses with capital adequacy ratios of below 10 percent and some below 5 percent and nearing collapse so it is a real problem.

Dr. Bawumia also made reference to the Bank of Ghana’s first financial stability report for 2016, which revealed that bad loans on the books of commercial banks in the country increased by 14.9 percent to GHc 4.52 billion in 2015 against the GHc 2.72 billion recorded in 2014.

Bawumia playing politics

At a press conference on Tuesday, the Minority’s Ranking Member of the Finance Committee, Cassiel Ato Forson, said Dr. Bawumia, during his September 2016 lecture on the state of Ghana’s economy, “took advantage of the political landscape to disseminate information that is supposed to be classified.”

Mr. Ato Forson, who was a deputy Finance Minister at the time, said the Mahama government contracted a transaction advisor to work with some of these banks and produce a report.

“It [the report] was released to the government, or Bank of Ghana, at the time, around July [2016]. Part of it was leaked and the then-Running Mate decided to take political advantage and then announce it. I thought it was overly unfair.”

Mr. Ato Forson revealed further that the report containing the “classified” information on the eight banks was a draft one but challenged the vice president to now reveal the identity of the banks said to be on the brink of collapse.

“I Ato Forson, I am asking him, since he is now the chairman of the economic management team, to inform this Republic how many banks are threatened under his stewardship.”

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By: Sixtus Dong Ullo/Delali Adogla-Bessa/citifmonline.com/Ghana

The post Bawumia’s prediction of banks collapse was classified – Minority appeared first on Citi 97.3 FM - Relevant Radio. Always.

The same may apply to UT Bank shareholders, though the central bank is considering compensating shareholders listed on the Stock Exchange.

[contextly_sidebar id=”YGL3sCW1uD6AcxMBMmrEBCOGsdcwODEV”]Discussions with the Ghana Stock Exchange in the coming days will determine the way forward for persons or organisations who bought shares of UT Bank on the stocks, according to the Head of Banking Supervision of the Bank of Ghana, Raymond Amanfu.

With respect to Capital Bank, Mr. Amanfu explained that its shareholders should have been more vigilant given they bore the brunt of the risk.

“Now you must protect your interest as a shareholder. They appointed the board. The boards are accountable them so if  the board is accountable to you and you are the shareholders, and quite a significant number who are shareholders are on the board, and you supervise the banks to get into this situation – you are the risk taker.”

In UT Bank’s case, it has institutional shareholders, some of which are on the Ghana Stock Exchange thus, further considerations will have to be made, Mr. Amanfu said.

“We think that there are issues of listed companies which are being discussed with the stock but the fact that we are listed does not mean that we should wait for you to prove how much of deposits money that is at stake compared to the huge deposits that have been taken.”

“…are we supposed to say that because you have listed, you allow the banks to run and but millions of deposited funds at risk? That is why were are saying we have to discuss this matter further with the stock exchange because, ultimately, the ordinary shareholder is the highest risk taker,” he added.

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By: citifmonlne.com/Ghana

The post Capital Bank shareholders won’t be compensated – BoG appeared first on Citi 97.3 FM - Relevant Radio. Always.