BoG Saves uniBank From Collapse

The Bank of Ghana has appointed KPMG to take over as Official Administrator for uniBank Ghana Limited.

According to the Central Bank, the appointment of a new administrator for uniBank which takes effect from Tuesday March 20, 2018 is aimed at saving uniBank from imminent collapse.

Dr. Ernest Addison, Governor, BoG who announced this at a press conference in Accra yesterday said uniBank has persistently maintained a capital adequacy ratio (CAR) below zero (currently negative 24%), making it technically insolvent.

This he said contravenes section 29 of Act 930 which requires a minimum CAR of 10% to be maintained at all times, adding that 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%).

KPMG Controls uniBank

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 March 20, 2018.

In line with its powers under Act 930, KPMG will ascertain the state of the bank’s 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 to private ownership and management.

Dr. Addision said, 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’s Problem

The Governor explained that uniBank’s problems are part of the legacy issues in the financial sector attributed to weak economic growth and poor corporate governance and risk management practices.

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 4.75%.

The Central Bank said as part of efforts to recapitalize the bank, uniBank submitted capital restoration plans to the BoG which it implemented to build up its capital to 7.7% in August 2017.

“Subsequent reviews of uniBank’s books by Bank of Ghana’s supervision teams showed that the bank had not reported the state of its loan book accurately. Consequently, by 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%. The bank has failed to submit its monthly returns to the Bank of Ghana for January and February 2018, and as a result Bank of Ghana has no evidence to suggest that its CAR has been restored to the regulatory minimum of 10%”, Dr. Addison explained.

He said efforts made by Bank of Ghana’s supervisory teams who have visited the bank’s head office several times this month to obtain current information on the bank’s financial health, proved futile as the bank’s management failed to cooperate with the Bank of Ghana staff on site.

“Allowing the continuation of uniBank’s activities in their current form would be detrimental to the interests of depositors and the banking system as a whole.

“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”.

The Bank of Ghana assured customers of uniBank that all deposits they have with uniBank are, and will remain, safe and that they can continue to do business at any of its branches.

By: Cephas Larbi/ [email protected]