Bank of Ghana Collapses Five Banks into Consolidated Bank Ghana Ltd

Thursday, August 02, 2018 08.15AM / BoGRelease / WebTV News

The Bank of Ghana has collapsed fivebanks into a Consolidated Bank of Ghana Limited.

The banks are BEIGE, Sovereign, Construction, UniBank and Royal Bank.

This is a consequential action following the insolvency of four banks afterinvestigations by the Bank of Ghana. Construction Bank had been expected tofold up due to recapitalisation challenges.

The Bank of Ghana (BoG) Governor, Dr Ernest Addison announced this yesterdayafternoon.

The government has also issued a bondtotaling GHc5.6 billion to cater for the bad assets of the four banks.

How it Looks:

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Source: Modern Ghana

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GOVERNMENT ESTABLISHES NEWINDIGENOUS BANK; BANK OF GHANA REVOKES LICENCES OF FIVE BANKS AND APPOINTSRECEIVER IN RESPECT OF THEIR ASSETS AND LIABILITIES

FREQUENTLY ASKED QUESTIONS

Q. What has happened to uniBank GhanaLimited, The Royal Bank Limited, Beige Bank Limited, Sovereign Bank Limited,and Construction Bank Limited?

A. The Bank ofGhana has revoked the banking licences of these five banks and has appointed aReceiver over their assets and liabilities. Deposits and selected assets andliabilities of these banks have been acquired and assumed by a new bank –Consolidated Bank Ghana Limited. All deposits of the five banks are safe andhave been transferred to the Consolidated Bank. Customers can carry out their businessas usual at their respective banks which will now become branches ofConsolidated Bank. All staff of these banks will become staff of ConsolidatedBank. Boards of Directors and shareholders of these banks no longer have anyroles.

Q. Who is the Receiver?

A. Mr. NiiAmanor Dodoo of KPMG has been appointed by the Bank of Ghana as the Receiver ofthe five banks to take control and possession of their assets and liabilities.

Q. What happens to the oldshareholders of the banks?

A. Theshareholders will only be entitled to any remaining assets of their respectivebanks after all creditors left in the receivership have been settled by thereceiver.

Q. Who are the shareholders ofConsolidated Bank Ghana Limited?

A. TheGovernment of Ghana is 100% shareholder of the bank.

Q. Why did Government decide toestablish a new bank for this purpose?

A. The Banksand Specialised Deposit-Taking Institutions Act of 2016 (Act 930) allows theGovernment to establish a bridge bank for the purpose of acquiring some or allof the assets and liabilities of a failed bank, if necessary, to maintainfinancial stability. The Government’s decision to establish Consolidated Bankis in the best interest of depositors and the financial system as a whole.It ensures that deposits and other systemic liabilities are transferred to aclean bank to allow depositors and other customers continue to have access tocritical banking services. It also ensures that the banking sector maintains astrong indigenous Ghanaian presence.

Q. What does this step mean for theofficial administration under which uniBank was put some months ago?

A. The officialadministration has been terminated. Based on the report of the officialadministrator, the Bank of Ghana has determined that uniBank cannot berehabilitated. The Bank of Ghana has therefore revoked uniBank’s universalbanking licence.

Q. Does this mean that all the banksare now owned and managed by the newly-created bank?

A. ConsolidatedBank Ghana Limited has assumed selected assets and liabilities of the fivebanks.

Q. What will happen to the assetsand liabilities not transferred to Consolidated Bank?

A. All depositsand other key liabilities have been transferred to Consolidated Bank. A fewassets that are considered good have also been transferred to ConsolidatedBank. Bad assets not assumed by Consolidated Bank will be managed by theReceiver and realized to pay liabilities and transferred to Consolidated Bank.

Q. Does Government of Ghana intendto own Consolidated Bank Ghana Limited forever?

A. TheGovernment of Ghana intends to offload its shares in Consolidated Bank GhanaLimited within a period of two years. The Government intends to give ordinaryGhanaians the opportunity to acquire these shares.

Q. Why has the Bank of Ghana decidedto revoke the licences of uniBank, Royal Bank, Construction Bank, SovereignBank, and Beige Bank?

A. uniBank,Royal Bank, and Beige Bank were deeply insolvent, meaning that theirliabilities exceeded their assets, putting them in a position not to be able tomeet their obligations as and when they fell due. Construction Bank andSovereign Bank obtained their banking licences by false pretences through theuse of suspicious and non-existent capital, which has resulted in a situationwhere their reported capital is inaccessible to them for their operations. Toprotect depositors and other customers and the financial system as a whole, theBank of Ghana has revoked the licenses of uniBank, Royal Bank, Beige Bank, andSovereign Bank, and Construction Bank.

Q. Why is Construction Bank Limitedpart of the pack for receivership when it has announced in the media that it issurrendering its licence and has indeed applied to the Bank of Ghana tovoluntarily wind up?

A. VoluntaryWinding Up is not the appropriate resolution mechanism for Construction Bankgiven its financial condition. Under Act 930, a bank can only surrender itslicence upon revocation of same. Surrender of licence per se is not an optionfor the discontinuance of banking business.

Q. Would it have been possible tofind another solution other than revoking the licences of the five banks?

A. The Bank ofGhana decided to revoke their licences after determining there were no otherfeasible options in line with the relevant law.

Q. Will any depositors lose theirfunds?

A. No. Alldeposits are safe. Depositors of these four banks will now become customers ofConsolidated Bank. All depositors will have access to the full amount of theirdeposit accounts, and will be able to access their accounts and all theirnormal banking transactions at the various branches and ATMs of the five banksnow under the ownership and control of Consolidated Bank.

Q. What will happen to borrowers(loan customers) of the banks?

A. Borrowers ofthe five banks are required to comply with all the terms of the loans oradvances they obtained from their respective banks. They are to service them inline with instructions to be received from the Receiver and/or ConsolidatedBank.

Q. Must I continue making loanpayments?

A. Yes. Yourloan agreement is a legally binding contract and you must continue to makepayments as required under the repayment schedule.

Q. When and where will deposits bepaid?

A. Depositswill be available at all the uniBank, Royal Bank, Sovereign Bank, ConstructionBank, and Beige Bank branch locations which will be rebranded as ConsolidatedBank locations.

Q. Will all branch facilities beopened for payment?

A. Yes. All ofuniBank, Royal Bank, Construction Bank, Sovereign Bank, and Beige Bank branchesand head offices will be opened as branches of Consolidated Bank. Depositorscan continue banking operations as normal and conduct business at theselocations.

Q. What will happen to employees ofuniBank, Royal Bank, Construction Bank, Sovereign Bank, and Beige Bank?

A. All staff of these banks willbecome staff of the Consolidated Bank.

Source: BoG Release