<<Print>>

Peacefmonline can confirm that the Bank of Ghana has taken up oversight responsibilities of Unibank, an indigenous private bank.

Peacefmonline.com sources say the Central Bank has appointed KPMG as Official Administrator to take over control of UNIBANK because its "Capital Adequacy Ratio (CAR) has fallen below 50% of the required minimum of 10%".

It is understood that UNIBANK is insolvent.

A statement issued by the Central Bank and sighted by Peacefmonline says the appointment of an "official administrator is aimed at saving UNIBANK from immiment collapse".

The take-over comes a few weeks after Unibank announced a purported takeover of ADB after some shareholders of the latter, pledged their shares in the bank.

The BoG at the time, dismissed the reports explaining that it had not approved any such agreement.

The top management of Unibank are Dr. Kwabena Duffuor II who is Chief Executive Officer, Ekow Nyarko Dadzie-Dennis Chief Operating Officer, Executive Director Owusu-Ansah Awere, Executive Clifford Duke Mettle, Director of Risk Management Kwesi Nkrumah Pimpah.

They are expected to give way to the official administrator to run the bank.

The Bank of Ghana (BOG) announced the appointment of KPMG over Unibank takes immediate effect from Tuesday, March 20, 2018.

"In exercise of its powers under Sections 107 and 108 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) the Bank of Ghana has effective today 20th March 2018, appointed KPMG as Official Administrator for UniBank Ghana Limited (UniBank).

"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%). Under section 108 of Act 930, the Official Administrator is authorized to exercise a variety of powers to rehabilitate and return the bank to regulatory compliance within a period of six months, at the end of which the bank will be returned to private ownership and management", the statement read.

"It will prevent losses to depositors and other creditors, and ensure that the financial condition of the bank does not create further risks for the entire financial system. 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 today. 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".

It is also "paramount to state that Unibank is not closed and liquidated".

Citing reasons for the takeover, the Central bank further disclosed 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%. As part of efforts to recapitalize the bank, it submitted capital restoration plans to the Bank of Ghana 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%.

"The appointment of the Official Administrator", according to BOG, has become necessary due to the fact that UniBank has among other things:

a) Persistently maintained a capital adequacy ratio (CAR) below zero (currently negative 24%), making it technically insolvent. This contravenes section 29 of Act 930 which requires a minimum CAR of 10% to be maintained at all times.

b) Persistently suffered liquidity shortfalls and consistently breached its cash reserve requirement. As a result, UniBank has relied extensively on liquidity support (over GHS 2.2 billion) from the Bank of Ghana over the past two years to meet its recurring liabilities. Among other things, a key shareholder of the bank managed to obtain liquidity support from the Bank of Ghana using third party banks as its agents. The Bank of Ghana’s exposure to the bank was therefore underestimated by nearly GHS 400 million, as this amount was not reflected in its books.

c) Conducted its credit administration in a manner that has jeopardized the interests of depositors and the financial sector as a whole.

d) Failed to comply with a directive of the Bank of Ghana dated 26th October, 2017 under section 105 of Act 930, prohibiting the bank from granting new loans and incurring new capital expenditures.

e) Failed to comply with several other regulatory requirements, including:

§ Lending to a number of borrowers in excess of its regulatory lending limit (single obligor limit) under section 62 of the Banks and SDIs Act, 2016 (Act 930);

§ Borrowing from the inter-bank market without the written approval of the Bank of Ghana when its CAR was less than the prescribed ten percent (10%), in breach of section 66(1) of Act 930.

§ Outsourcing a number of services such as those of tellers, receptionists, and security, to affiliate companies without the prior approval by the Bank of Ghana, contrary to section 60 (12) of Act 930.

§ Refusing to cooperate with the Bank of Ghana in the performance of its supervisory responsibilities, including deliberately concealing some liabilities from its balance sheet, and failing to submit documents and records for supervisory inspection.

§ Poor corporate governance and risk management practices which rendered the bank vulnerable to macroeconomic shocks.

§ Generally conducting its affairs in a manner detrimental to the interests of depositors and the financial system as a whole.

The statement also revealed that "Unibank has deteriorated despite measures by the Ministry of Finance to absorb debts of Government contractors owed to the bank to a tune of Gh¢428,817,961.

"...the bank engaged in significant transactions with its parent company and affiliate companies including connected lending and other related party transactions without sufficient controls as required by law. 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".

BOG however has allayed fears of the customers of Unibank stating emphatically that the bank will remain open for business under the management and control of KPMG with oversight responsibility from the Central Bank.

"The Bank of Ghana takes this opportunity to reassure 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. NO DEPOSITOR OF THE BANK WILL LOSE ANY MONEY".