Probe UT, Capital Banks’ Sudden Death


…As It Sympathizes With Low Salary Staff

The Minority Caucus Members in Parliament has called for a bi-partisan investigation into the circumstances that led to the collapse of two prominent indigenous commercial banks, namely the UT Bank and the Capital Bank.

According to the Minority, the two indigenous banks had on several occasions won enviable awards in recent high profile ceremonies and that their recent predicament leading to the Ghana Commercial Bank (GCB) taking over of their liquidity must be known to the Ghanaian public.

The Bank of Ghana (BoG) on Monday, this week, announced that the GCB Bank has taken over UT Bank Ltd and Capital Bank Ltd, as the two banks were struggling to operate financially.

A statement issued by the Central Bank said: “The Bank of Ghana has approved a Purchase and Assumption transaction with GCB Bank Limited that transfers all deposits and selected assets of UT Bank Ltd and Capital Bank Ltd to GCB Bank Ltd.”

The statement further indicated that, “the Bank of Ghana has revoked the licenses of UT Bank Ltd and Capital Bank Ltd. This action has become necessary due to severe impairment of their capital.

“The remaining assets and liabilities will be realised and settled respectively through a receivership process to be undertaken by Messrs Vish Ashiagbor and Eric Nana Nipah of PricewaterhouseCoopers”

“The main offices and branches of UT Bank and Capital Bank will be under the control of GCB Bank, and will be opened at 1 PM today(Monday)  for normal business transactions.” it added.

However, speaking at a press conference in parliament yesterday, the Minority’s Ranking Member and Spokesperson on Finance, Hon. Cassiel Ato Baah Forson, said government needs to probe the matter to give Ghanaians assurances that their deposits are safe.

“We are urging the government to, as a matter of urgency, institute a bi-partisan probe into what occasioned the rise and fall of these two banks. We think that this situation needs to be investigated so that if it is true that actions or inactions by owners and managers of these banks actually resulted in the banks collapsing, I believe that the state will have to take action.

“We call for a bi-partisan probe and should be done immediately so that the people of this country will have some confidence in the banking sector to serve as a deterrent, going forward,” the Minority said.

Mr. Ato Forson indicated that, in addition to the probe, the Minority would also drag the Minister of Finance and the Governor of the Bank of Ghana before the house to provide some specific answers as to what led to the collapse of the two indigenous banks.

He observed that it was surprising for the Minority and the Ghanaian public that the two banks that had won enviable awards in recent high profile ceremonies could all of a sudden collapse.

“We the Members of the Minority of this Parliament, as a matter of urgency, will be requesting through the Rt-Honourable Speaker that the Minister of Finance and the Governor of the Bank of Ghana be invited to brief parliament about this development and to give assurances that depositors will suffer no losses.”

While urging the BoG to further strengthen its supervisory and monitoring responsibilities, he strongly urged the three institutions, (BOG, GCB and PwC), and the Ministry of Finance (MoF) that could assume any ultimate fiscal risks under the Banking laws, to ensure strict adherence to the distinct benefit of the purchase and assumption transaction, so that no single depositor loses his or her investment.

Mr. Ato Forson noted that, it would result in an unforeseen burden on taxpayers instead of the original owners of UT and Capital banks, should the three institutions fail to adhere to distinct benefits of the P&A transaction.

He stated that the erstwhile NDC government took a deliberate policy action to pay the TOR debt owed to GCB, which helped to restore the bank’s balance sheet to its current healthy status, and also not to interfere in GCB’s operations.

“It will be recalled that the NDC government introduced a number of structural measures that sought to strengthen the financial sector and to protect depositors.

“Notably among them was the Ghana Deposit Protection Act, 2016 (Act 931). This Act established the Deposit Protection Scheme (Insurance), the Deposit Protection Fund, and Deposit Protection Corporation.

“The Act seeks to protect depositors from potential losses resulting from the occurrence of an insured event. It is also to support the development of a safe, sound, efficient and stable banking system in Ghana.

“We urge the BOG to, as a matter of urgency, start implementing the provisions of this Act without further delay.”

The Minority ranking member on Finance also pointed out that, the  NDC government also enacted the Specialized Deposit Taking Institutions Act, 2016 (Act 930) to facilitate the development of the financial sector, and provide an appropriate and robust legal framework to deal with emerging risk and vulnerabilities in the banking system as the present case.

The Act addresses supervisory and regulatory gaps to enable the Bank of Ghana superintend over financial service providers in the micro-finance industry and, as well, ensures financial consumer protection, promotion of innovation, and financial inclusion.

This the Minority urged  BOG to ensure that the acquiring bank (GCB), which is the largest indigenous bank, with both public and private shareholders, is not overburdened unnecessarily with non-performing loans and impaired assets.

The Minority, however, commended the BOG for having approved the purchase and assumption transaction between UT Bank, Capital Bank and GCB Bank, describing it as, “a relatively smooth takeover.”

They also expressed confidence that the acquiring bank, GCB Bank, will undoubtedly increase its market share while the productive financial assets of UT Bank and Capital Bank are maintained.

The Minority also sympathized with the working staff of the two collapsed banks and called on the GCB Bank to take sympathetic measures that would ensure that low salary earners are not affected, should there be rationalization of staff.

To them, any mass lay-off of staff affecting the low salary earners could trigger insecurity in the employment sector in the country.



Source: Engsalige Nyaaba

The Republic News Online

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