BoG probes UT, Capital Bank directors for roles in collapse of their banks

The Bank of Ghana (BoG) has begun a forensic audit into the operations of the two insolvent banks, the UT and the Capital banks, and their directors to unravel the factors leading to their collapse.

The audit will seek to ascertain the banks’ compliance with the rules of corporate governance and adherence to proper financial administration.

The Governor of the BoG, Dr Ernest Addison, said at a hurriedly arranged news conference in Accra on Monday that those who breached the corporate governance and financial rules of the banks would face punitive sanctions.

“The last phase of the BoG’s action will involve a thorough investigation of the operations of the UT Bank and the Capital Bank and appropriate action will be taken against shareholders, directors and key management personnel who are found to be culpable,” he warned.

The warning comes a day after the central bank revoked the licences of the UT Bank and the Capital Bank because of their terrible financial situation.

The UT Bank has six directors, with Captain Joseph Nsonamoah (retd) as the Co-Founder and Chairman of the board, while the Capital Bank too has six directors, with Dr Mensa Otabil as its Chairman.

The revocation of the licences renders the banks unable to operate as commercial banks in the country.

However, Dr Addison said customers of the two banks had no cause to worry because the operations of the banks would continue to go on but under the management of the GCB Limited.

Reasons for liquidation

The liquidation of the UT and the Capital banks became necessary in order to protect depositors’ funds owing to the "severe impairment" of their capital, the central bank said.

The liquidation formed part of prior actions agreed with the International Monetary Fund (IMF) ahead of the next review of Ghana's three-year aid programme at the end of August.

The GCB Bank is the second largest bank by assets out of the 33 banks operating in Ghana, including the UT and the Capital banks.

"The UT Bank and the Capital Bank were deeply insolvent, meaning that their liabilities exceeded their assets, putting them in a position not to be able to meet their obligations," Dr Addison said.

Deposits at the two banks were safe and depositors would now become customers of the GCB Bank and they might continue banking at the UT Bank and the Capital Bank branch locations, he added.

 In the last quarter of 2016, the two banks were requested to submit restructuring and capital restoration plans but the plans they submitted were found to be unacceptable.

A pool of bidders was asked to express interest in the two banks and the GCB was selected among three others based on purchase price, cost of funding, branches to be retained, staff to be employed, and impacting the acquiring bank’s capital adequacy ratio.

Growing network of GCB

Meanwhile, the GCB, in a release issued moments after the BoG’s news conference, said it had assumed the 53 branches of the two banks, thereby growing its network to 214 branches across the country.

The GCB is currently the largest indigenous bank in the country, with an asset base of GH¢6.3 billion.

The statement assured customers of the UT and the Capital banks of unfettered access to their funds through the various known channels.

 In a related development, the Ghana Stock Exchange (GSE) has accused the UT Bank of failing to publish its financial results since the end of the financial year December 31, 2015.

In a statement issued in Accra yesterday after the takeover of the two banks by the GCB, the GSE said: “The non-publication is in breach of the continuing listing obligations under the GSE Listing Rules. The GSE has collaborated closely with the BoG on the matter.”