{"id":411464,"date":"2018-03-20T19:44:46","date_gmt":"2018-03-20T19:44:46","guid":{"rendered":"http:\/\/citifmonline.com\/?p=411464"},"modified":"2018-03-21T09:58:22","modified_gmt":"2018-03-21T09:58:22","slug":"unibank-takeover-deposits-are-safe-bog","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/2018\/03\/unibank-takeover-deposits-are-safe-bog\/","title":{"rendered":"uniBank takeover: Deposits are safe \u2013 BoG"},"content":{"rendered":"

The Bank of Ghana (BoG) has assured customers of indigenous local bank, uniBank, that their deposits will remain safe despite a takeover of the bank\u2019s assets and management.<\/p>\n

\u201cThe Bank of Ghana takes this opportunity to reassure customers of UniBank that all\u00a0deposits they have with UniBank are, and will remain safe, and that they can continue to do business at any of its branches,\u201d BoG said in a statement.<\/p>\n

[contextly_sidebar id=”nWrXjiMsS09IBrYP2ihuewosYXx5pYRP”]The Central Bank at a press conference held earlier today [Tuesday], announced that it had appointed KPMG as administrator of uniBank since it had become insolvent.<\/p>\n

The Governor of the Bank of Ghana, Dr. Ernest Addison, explained that the decision was to save the bank from collapse.<\/p>\n

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 \u201ccarry out the responsibilities of the shareholders, directors, and key management personnel of UniBank.\u201d<\/p>\n

It stated that during the period of official administration of UniBank, \u201cthe bank will remain open for business under the management and control of KPMG overseen by the Bank of Ghana,\u00a0and is not being closed and liquidated.\u201d<\/p>\n

Unibank\u2019s purported takeover<\/strong><\/p>\n

This takeover comes on the back of a\u00a0purported control<\/strong><\/a>\u00a0<\/span>of the\u00a0Agricultural Development Bank (adb) by Unibank weeks ago.<\/p>\n

There were reports that uniBank had taken over adb after four shareholders of the development bank; comprising Belstar Capital, Starmount Development company, EDC and SIC Financial Services Limited, pledged their shares, proceeds, entitlements and voting rights to uniBank.<\/p>\n

The Chief Executive Officer of uniBank, Dr. Kwabena Duffour Jr. later told Citi News that uniBank had control over adb and that the move was in the best interest of the banking industry.<\/p>\n

This was however followed by a u-turn from uniBank, after adb was suspended by the Ghana Stock Exchange and the Bank of Ghana announced that it had not approved a purported takeover.<\/p>\n

adb also came out to deny media reports that uniBank had taken over its operations.<\/p>\n

UT , Capital Bank takeover <\/strong><\/p>\n

In 2017, the BoG similarly granted GCB Bank permission to take over UT Bank and Capital Bank after they were unable to increase their cash requirement need for their banking operations.<\/p>\n

Below is the Bank’s statement on the uniBank takeover\u00a0<\/strong><\/p>\n

In exercise of its powers under Sections 107 and\u00a0108 of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930) the Bank of Ghana has, effective today 20th March 2018, appointed KPMG as Official Administrator for uniBank Ghana Limited (uniBank).<\/p>\n

Section 107 of Act 930 empowers the Bank of Ghana to appoint an Official Administrator to take official control of a bank when its capital adequacy ratio (CAR) has fallen below 50% of the required minimum of 10% (i.e. below 5%).<\/p>\n

Under section 108 of Act 930, the Official Administrator is authorized to exercise a variety of powers to\u00a0rehabilitate and return the bank to regulatory compliance within a period of six months, at the end of which the bank will be returned to private ownership and management.<\/p>\n

The appointment by the Bank of Ghana of the official administrator is aimed at saving UniBank from imminent collapse. It will prevent potential losses to depositors and other creditors, and ensure that the financial condition of the bank does not create further\u00a0risks for the entire financial system.<\/p>\n

KPMG as Official Administrator will assume control of the bank and all its branches and carry out the responsibilities of the shareholders, directors, and key management personnel of UniBank with effect from today. In line with its powers under Act 930,\u00a0KPMG will ascertain the state of the bank\u2019s assets and liabilities, and exercise a variety of powers under Act 930 to rehabilitate and return the bank to regulatory compliance and viability within a period of six months, at the end of which the bank will be returned\u00a0to private ownership and management.<\/p>\n

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,\u00a0and is not being closed and liquidated.<\/p>\n

UniBank\u2019s problems are part of the legacy issues in the financial sector attributed to weak economic growth and poor corporate governance and risk management practices.<\/p>\n

It will be recalled that UniBank was one of nine banks identified after the asset quality review exercise undertaken in 2016, to be significantly undercapitalized with a CAR of\u00a04.75%.<\/p>\n

As part of efforts to recapitalize the bank, it submitted capital restoration plans to the Bank of Ghana which it implemented to build up its capital to 7.7% in August 2017. Subsequent reviews of UniBank\u2019s books by Bank of Ghana\u2019s supervision teams showed that the bank had not reported the state of its loan book accurately.<\/p>\n

Consequently,\u00a0by October 2017, its CAR was estimated at negative 12.5 %, making it technically insolvent. By December 2017, its CAR had dropped further to negative 24%.<\/p>\n

The bank has failed to submit its monthly returns to the Bank of Ghana for January and\u00a0February 2018, and\u00a0as a result\u00a0Bank of Ghana has no evidence to suggest that its CAR has been restored to the regulatory minimum of 10%.<\/p>\n

Efforts made by Bank of Ghana\u2019s supervisory teams who have visited the bank\u2019s head office several times this month to obtain current information on the bank\u2019s financial\u00a0health, proved futile as the bank\u2019s management failed to cooperate with the Bank of\u00a0Ghana staff on site.<\/p>\n

The appointment of the Official Administrator has\u00a0therefore\u00a0become necessary due to the fact that uniBank has, among other things:<\/p>\n

    \n
  1. a) Persistently maintained a capital adequacy ratio (CAR) below zero (currently\u00a0negative 24%), making it technically insolvent. This contravenes section 29 of Act 930 which requires a minimum CAR of 10% to be maintained at all times.<\/li>\n
  2. b) Persistently suffered liquidity shortfalls and consistently breached its cash reserve requirement. As a result, UniBank has relied extensively on liquidity support (over GHS 2.2 billion) from the Bank of Ghana over the past two years to meet its recurring liabilities. Among other things, a key shareholder of the bank managed to obtain liquidity support from the Bank of Ghana using\u00a0third party\u00a0banks as its agents. The Bank of Ghana\u2019s exposure to the bank was therefore underestimated by nearly GHS 400 million, as this amount was not reflected in its books.<\/li>\n
  3. c) Conducted its credit administration in a manner that has jeopardized the interests of depositors and the financial sector as a whole.<\/li>\n
  4. d) Failed to comply with a directive of the Bank of Ghana dated 26th October,\u00a02017 under section 105 of Act 930, prohibiting the bank from granting new loans and incurring new capital expenditures.<\/li>\n
  5. e) Failed to comply with several other regulatory requirements, including:<\/li>\n<\/ol>\n
      \n
    • Lending to a number of borrowers in excess of its regulatory lending limit (single\u00a0obligor limit) under section 62 of the Banks and SDIs Act, 2016 (Act 930);<\/li>\n
    • 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 section 66(1) of Act 930.<\/li>\n
    • Outsourcing a number of services such as those of tellers, receptionists, and security, to\u00a0affiliate\u00a0companies without the prior approval by the Bank of Ghana, contrary to section 60 (12) of Act 930.<\/li>\n
    • Refusing 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.<\/li>\n
    • Poor corporate governance and risk management practices which rendered the bank vulnerable to macroeconomic shocks.<\/li>\n
    • Generally conducting its affairs in a manner detrimental to the interests of depositors and the financial system as a whole.<\/li>\n<\/ul>\n

      In spite of the Ministry of Finance recently agreeing to absorb a significant amount of the debts of Government contractors owed to the bank to the tune of \u00a2428,817,961 (backed by Interim Payment Certificates issued to contractors), the bank has not been able to address its capital deficiency, which has continued to deteriorate.<\/p>\n

      Also, the bank engaged in significant transactions with its parent company and affiliate companies including connected lending and other related party transactions without sufficient controls as required by law.<\/p>\n

      Allowing the continuation of UniBank\u2019s activities in their current form would be detrimental to the interests of depositors and the banking system as a whole.<\/p>\n

      Several attempts by the Bank of Ghana to work together with management and shareholders of the bank to address the capital deficiency and liquidity challenges have failed to achieve the desired outcome, making the continuous reliance on Bank of Ghana for liquidity support unsustainable.<\/p>\n

      More recently, the bank\u2019s announcement of a purported pledge of ADB Bank shares in its favour by its shareholders to secure commitments for recapitalization, were deemed by the Bank of Ghana to be null and void as no prior approval had been obtained from the Bank of Ghana as required by Act 930 for acquiring significant shares in a bank or exercising other forms of control by virtue of any transaction.<\/p>\n

      In any event, a request by the Bank of Ghana to the bank to submit copies of the Deed of Pledge and underlying transactional documents were not heeded by uniBank, its shareholders, directors, or management.<\/p>\n

      Furthermore, there are additional regulatory hurdles outside the control of the Bank of Ghana required to be cleared by UniBank before potentially realizing any value, if at all, from the said transaction, making it incapable of addressing the immediate capital and liquidity needs of the bank.<\/p>\n

      The Bank of Ghana takes this opportunity to reassure customers of UniBank that all\u00a0deposits they have with UniBank are, and will remain, safe and that they can continue to do business at any of its branches.<\/p>\n

      NO DEPOSITOR OF THE BANK WILL LOSE ANY MONEY.<\/p>\n

      Bank of Ghana remains committed to supporting the orderly development of Ghana\u2019s banking sector including indigenous Ghanaian banks,\u00a0while promoting a strong and resilient sector to drive Ghana\u2019s economic growth.<\/p>\n

      Kindly direct any questions to Bank of Ghana. You may call telephone number\u00a00302665034 or send email to bsd@bog.gov.gh.<\/p>\n

      –<\/p>\n

      By: Marian Ansah\/citifmonline.com\/Ghana<\/p>\n","protected":false},"excerpt":{"rendered":"

      The Bank of Ghana (BoG) has assured customers of indigenous local bank, uniBank, that their deposits will remain safe despite a takeover of the bank\u2019s assets and management. \u201cThe Bank of Ghana takes this opportunity to reassure customers of UniBank that all\u00a0deposits they have with UniBank are, and will remain safe, and that they can […]<\/p>\n","protected":false},"author":14,"featured_media":411471,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[32,11],"tags":[1144,3,18137,100],"yoast_head":"\nuniBank takeover: Deposits are safe \u2013 BoG - Citi 97.3 FM - Relevant Radio. 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