{"id":411810,"date":"2018-03-22T10:00:54","date_gmt":"2018-03-22T10:00:54","guid":{"rendered":"http:\/\/citifmonline.com\/?p=411810"},"modified":"2018-03-22T08:16:48","modified_gmt":"2018-03-22T08:16:48","slug":"local-banks-struggles-due-to-poor-corporate-governance-assibey-yeboah","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/2018\/03\/local-banks-struggles-due-to-poor-corporate-governance-assibey-yeboah\/","title":{"rendered":"Local banks’ struggles due to poor corporate governance – Assibey-Yeboah"},"content":{"rendered":"
The Chairman of Parliament\u2019s Finance Committee, Dr. Mark Assibey-Yeboah, has attributed the challenges facing some indigenous financial institutions to bad corporate governance practices.<\/p>\n
Dr. Assibey-Yeboah said the appointment of blood relations and friends into executive positions at the expense of competence and the establishment of business lines without the required capacity are some of the key reasons why some local banks are struggling or have collapsed\u00a0completely.<\/p>\n
[contextly_sidebar id=”wuGOjVSW6UcVtg1hGNQZkT8ZdwwlXEv9″]”These are corporate management issues. It is for my father so I am the Managing Director and I am loaning out [Money]. They venture into things. DKM had DKM airport or something. They had cement companies. If you go into a lot of these, [you see that] they had a lot of business that they are not well vexed in,\u201d he told the media in Parliament on Wednesday.<\/p>\n
The MP was commenting on the recent insolvency of uniBank, an indigenous\u00a0bank.<\/p>\n
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.<\/p>\n
uniBank also suffered liquidity shortfalls and consistently breached its cash reserve requirement.<\/p>\n
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.<\/p>\n
uniBank’s insolvency followed the total collapse of two other indigenous banks, UT Bank and Capital Bank in August 2017.<\/p>\n
UT and Capital Banks were unable to\u00a0turn around their negative capital adequacy position, which necessitated a\u00a0Purchase and Assumption agreement allowing GCB Bank to take over all their deposit liabilities and selected assets.<\/p>\n
BoG intervention timely<\/strong><\/p>\n Dr. Assibey-Yeboah, who is a customer of uniBank, said the Bank of Ghana’s (BoG) intervention is apt.<\/p>\n “It is the proper thing because if you are not careful and the bank goes under water, it is liquidated then I would have also lost my deposits at uniBank so what the Bank of Ghana did was the right thing to do.”<\/p>\n