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A credit consultant, Emmanuel Akrong has predicted that nine of the over 30 banks in Ghana could collapse if nothing is done immediately to save them.

Although he failed to name the ailing financial institutions, he said those banks have serious asset quality challenges which have affected their capital strengths and may force them into insolvency along with UT Bank, Capital bank and uniBank.

Mr. Akrong, who has done extensive research on the banking sector, further noted that three banks, one of which was uniBank, have been “on life support” from the Bank of Ghana.

Mr. Akrong made the revelation on the Citi Breakfast Show on Wednesday on the back of the takeover of indigenous bank, uniBank by the Central Bank. 

BoG, which has handed over management of the bank to audit firm, KPMG, said it took the decision to prevent uniBank from collapsing after several months of trying to give uniBank the chance to bounce back, to no avail.

The central bank explained that uniBank had low capital levels and took a number of decisions which the BoG had kicked against.

The uniBank takeover took Ghanaians by surprise as they were still reeling from the collapse of UT and Capital banks which were taken over by the GCB bank only seven months ago.

Despite painting a gloomy picture of the banking sector, Mr. Akrong said the sector is not in crisis, adding that the current challenges were manageable.

“There is no banking crisis at the moment. What we have is asset quality crisis but it is under a manageable scale. What I would say is that some of the issues that UT, Capital and uniBank have are not pervasive. It’s only a few banks in my view – not more than nine banks—have similar problems because their assets have been written down as a result of high asset quality problems and because of that it has eaten into their capital and for those banks, they are on the verge of collapse unless additional capital is pumped in them. But to put it in perspective, it is not pervasive. From a liquidity standpoint I would say roughly they are about 3 banks which from my analysis, one of them is uniBank,” he added.

Throwing more light on his research in the banking sector the consultant said most of the banks that are struggling to survive have issues with risk management.

“I’ve done extensive analysis on this. I did three analyses; liquidity analysis, asset quality and the other is capital. It doesn’t take you magic science for you to know who the nine banks are. You can easily see the banks which have capital problems. It’s clear from my analysis.”

“From asset quality standpoint, 15 banks have asset quality ratio of more than 20% which means one out of every 5 bank loan in Ghana is bad. That is a big problem. People ascribe it to energy sector but energy sector is not a problem. It’s a systemic issue of risk management. When it comes to capital, if I use the GHc120 million as a yardstick, I can count only nine banks which only have a capital problem at the moment. So you could see that it is not really big. On liquidity, it’s about three banks which are on liquidity life support, on asset quality, we have about 15 banks which are really in bad shape in terms of their asset quality and in terms of capital, we have like nine banks which have capital problems,” he added.

Blame auditors, uniBank management

On the uniBank collapse, Mr. Akrong blamed its management and auditors for the bank’s woes.

He insisted that if the auditors had done their work well, they could have predicted the fall of the bank ahead of time.