Thursday 02, August 2018 by Bloomberg

Ghana banking regulator merges five lenders in $1.2 billion bank rescue

 

Bank of Ghana revoked the licences of Unibank Ghana, Royal Bank, Beige Bank as well as Sovereign Bank Ltd and Construction Bank.

Ghana’s banking regulator said it created a new lender through a merger of five insolvent banks as the country sold GHC 5.8 billion ($1.2 billion) in bonds to clear their debt.

The lenders were among the smallest of Ghana’s 34 previously authorised banks and the merger is part of increasing efforts to avert failures in an industry that has been beset by poor governance and weak lending.

Ernest Addisonhe, the Governor of Banker of Ghana, said that the five lenders’ assets will be transferred to the newly created Consolidated Bank Ghana, which is fully owned by the Government and the new bank will be provided with GHC 450 million in fresh capital.

“All deposits of the five banks are safe and have been transferred to the Consolidated Bank, can carry out their business as usual at their respective banks, which will now become branches of Consolidated Bank.” Added Addisonhe.

Consolidated will acquire all deposits, “good assets” and some liabilities of the five lenders and the bond will finance the gap between the liabilities and good assets while the bank will be headed by Daniel Addo as CEO.

The central bank has intensified its oversight of Ghana’s banking sector in the past year as it announced a more than three-fold increase in the minimum capital requirements for lenders to GHC 400 million. The regulator placed Unibank Ghana under administration in March and withdrew the licences of two other banks in August for failing to meet capital adequacy thresholds.

The Government will offer financial support to state-controlled National Investment Bank, Agricultural Development Bank as well as other indigenous banks to help them meet the minimum capital requirement,” Addison said. “Such support will be limited to indigenous banks that are solvent, well governed and managed.”

The administrator that was appointed for Unibank found that the lender “was beyond rehabilitation” after shareholders and related parties took out GHC 5.3 billion in loans and other withdrawals without following due process.

Additionally, the Royal Bank’s non-performing loans constituted 79 per cent of all loans granted while Sovereign, Beige and Construction obtained their operating licences “by false pretences through the use of suspicious and non-existent capital.

Construction Bank’s CEO Stephen Kpordzih declined to comment when contacted by phone.

  

  

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