The Central Bank, Bank of Ghana has collapsed Premium Bank and Heritage Bank due to failure by the duo to meet the minimum capital requirement and obtaining operation license with questionable capital resources.

Governor of the Bank of Ghana, Dr. Ernest Addison disclosed the information during an update on the Banking Sector reforms as part of a 2-year cleanup exercise.

He noted that the institution has “approved a Purchase and Assumption Agreement between the Receiver and Consolidated Bank Ghana Limited (CBG) under which the Receiver has transferred some assets and liabilities of the two banks to CBG.”

“Pursuant to Section 123 of the Banks and Specialised-Deposit-Taking Institutions Act, 2016 (Act 930), the Bank of Ghana has revoked the banking licences of Premium Bank Limited and Heritage Bank Limited with effect from the date of this Notice and has appointed Mr. Vish Ashiagbor of PricewaterhouseCoopers as Receiver for the two banks. Complete details of the bases on which the licences of the two banks have been revoked are attached as Annexures 2 and 3. Among other things:

• Premium Bank was found to be insolvent as of 30th November 2018 with a capital adequacy ratio of negative 125.26%;

• Heritage Bank among other things obtained its banking licence on 4th October 2016 on the basis of capital with questionable sources. Furthermore, the bank was unable to meet the new minimum capital requirement of GHC 400 million as of 31st December 2018.”

Dr. Addison hinted that the closure of Premium Bank was supposed to have taken place in August last year but decided to hold on when the latter disclosed that there was a merger in the offing.

The merger eventually fell through resulting in the bank’s inability to meet the Central Bank’s proposed minimum capital requirement.

Bank of Ghana’s recapitalization reform has reduced the number of operating banks in the country from 33 to 23.