The Bank of Ghana (BoG) yesterday revoked the licences of five banks and merged them into an entity known as Consolidated Bank Limited.

The BoG claims some of affected banks procured their operational licences through dubious means.

The five banks are The Royal Bank, Beige Bank, Sovereign Bank Limited, Construction Bank and uniBank Ghana Limited.

Dr Ernest Addison, BoG Governor, who disclosed this at a press conference in Accra, said it has appointed Nii Amanor Dodoo of KPMG as the receiver for the five banks.

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

According to Dr Addison, all staff of the collapsed banks, totalling about 2,000, would become staff of the Consolidated Bank, adding that boards and shareholders of the five banks would no longer have any role in the new bank.

Reasons

The Governor explained that efforts by the banks to overcome financial difficulties proved futile, resulting in the worsening of their plight, hence the decision to merge them.

He said uniBank and Royal Bank were identified during the asset quality review update in a 2016 exercise to be significantly undercapitalized.

The two banks subsequently submitted capital restoration plans to BoG which failed to return them to solvency and compliance with prudential requirements.



Diagnosis of uniBank

“The official administrator appointed for uniBank in March 2018 has found that the bank is beyond rehabilitation. Shareholders, related and connected parties had taken amounts totalling GH¢3.7 billion which were neither granted through the normal credit delivery process nor reported as part of the bank’s loan portfolio. In addition, amounts totalling GH¢1.6 billion had been granted to shareholders, related and connected parties in the form of loans and advances without due process and in breach of relevant provisions of Act 930. Altogether, shareholders, related and connected parties of uniBank had taken out an amount of GH¢5.3 billion from the bank, constituting 75 per cent of its total assets.”

Royal Bank

According to Dr Addison, an on-site examination conducted by the BoG on 31st March, this year, revealed a number of irregularities at the Royal Bank.

The bank’s Non-Performing Loans constituted 78.9 per cent of total loans granted owing to poor credit risk and liquidity risk management controls.

He added: “A number of the bank’s transactions totalling GH¢161.92 million were entered into with shareholders, related and connected parties, structured to circumvent single obligor limits, conceal related party exposure limits, and overstate the capital position of the bank for the purpose of complying with the capital adequacy requirement.”

Sovereign Bank’s Illness

The Governor said it emerged that Sovereign Bank’s licence was obtained by false pretenses through the use of suspicious and non-existent capital as part of BoG’s investigations into the failure of Capital Bank Limited (currently in receivership).

“The bank is insolvent and unable to meet the daily liquidity obligations falling due. Liquidity support granted so far to the bank amounts to GH¢21 million as of 31st July, 2018. The bank has not been able to publish its audited accounts for December 2017 in violation of Section 90 (2) of Act 930,” the Governor disclosed.

The Sovereign Bank is said to be connected with owners of collapsed Capital Bank.



Beige Bank and Construction Bank

These banks, Dr Addison said, were each granted provisional licences in 2016 and launched in 2017.

“Subsequent investigations conducted by BoG revealed that similar to the case of Sovereign Bank, both banks obtained their banking licences under false pretense through the use of suspicious and non-existent capital, which has resulted in a situation where their reported capital is inaccessible to them for their operations.”

Consolidated Bank

Touching on the new entity, Dr Addison said government had capitalised it with GH¢450 million and given a universal banking licence with effect from 1st August, 2018.

“BoG has also approved a purchase and assumption agreement between Consolidated Bank and the Receiver for the five banks. Under the agreement, Consolidated Bank has acquired all deposits and special liabilities and good assets of the five banks. To finance the gap between the liabilities and good assets assumed by Consolidated Bank, government has issued a bond of up to GH¢5.76 billion,” he added.

The new bank will have its head office at the Manet Tower C, Airport City, Accra and all customers will have immediate access to their funds through the existing branches and ATMs of the five banks.

Management of new bank

The BoG has approved Daniel Addo as the new Chief Executive of the Consolidated Bank Ghana Limited.

In addition, the government has appointed Simon Dornoo (Consolidated Bank Director in charge of uniBank), Alex Dodoo (Consolidated Bank Director in charge of Royal Bank), Kesewa Brown (Consolidated Bank Director in charge of Construction Bank) and Babatunde Ampah (Consolidated Bank Director in charge of Beige Bank).

Boulders Advisors Limited, led by Reggie France, has also been appointed as Advisor to the Consolidated Bank Ghana Limited.