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.

[contextly_sidebar id=”vWiOA3Ng58tMntECjJAXCXIcfPZ7eNDh”]”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.

–

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

The post We’ll save uniBank first, probe management later – BoG appeared first on Citi 97.3 FM - Relevant Radio. Always.

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

The post Banking sector still strong despite uniBank takeover – BoG appeared first on Citi 97.3 FM - Relevant Radio. Always.

She replaces Dr. Johnson Asiamah who resigned on January 5, 2018.

[contextly_sidebar id=”2CTDaDu1zKklc7Z7bdZglNo0kFOGiGCy”]Mrs Awadzi is an international economic and financial lawyer with a total of 21 years of professional experience working in various capacities in Ghana and outside.

She was until the appointment, a Senior Counsel of the IMF’s Legal Department (Financial and Fiscal Law Unit).

She’s worked in countries such as Japan, South Africa, and the United Kingdom; and has also advised on financial sector reforms in many countries in the context of the IMF’s surveillance, lending, and technical assistance activities.

Her key areas of specialization are financial sector development and regulation, financial stability assessments, design of crisis management frameworks and financial safety nets, and legal and institutional aspects of public financial management.

Before joining the IMF in 2012, Elsie was a Commissioner of Ghana’s Securities & Exchange Commission for six years, worked on key financial sector legal reforms in Ghana, and worked in private law practice, among others.

She holds an LL.M. degree (International Business and Economic Law) with distinction from the Georgetown University Law Centre, an M.B.A. (Finance) from the University of Ghana, and an LL.B. Degree from the same university.

–

By: citibusinessnews.com/Ghana

The post Elsie Awadzi appointed as BoG 2nd Deputy Governor appeared first on Citi 97.3 FM - Relevant Radio. Always.