UT Bank is set to ask its shareholders next week for their mandate to raise GH₵100million to support its operations.
The bank is expected to raise the money through rights issues and private placement.
The Deputy Managing Director of UT Bank, Pearl Esua-Mensah, explained in Accra yesterday that the money will help to strengthen its balance sheet and to meet regulatory requirements in future.
�We expect, especially with the depreciation of the cedi, that the Central Bank will probably have no choice but to ask banks to increase their capital. What happens is that we have an AGM once a year, so if say in December or November a new director wants to increase the capital, we don�t want to wait till April the following year to start work on raising it.
�One of the ways to reduce the cost of funding is to raise capital because it is zero interest. So it is something that we are still contemplating. But we expect that if we have not shown shareholders that we are actually on our way right back up, they might not want to do a rights issue.
�It is something that we are sort of keeping in our pocket. So if we get to a point where we can show rather than just talk about increasing our performances, we can probably go back to shareholders and tell them to raise GH₵100million in equity; this is how much it can generate in profit, dividends etc,� she said.
Last year, UT Bank -- an indigenous financial institution -- for the first time in its 17-year history performed below expectation, recording 50% less profit than it did in 2012. This is in spite of the fact that the bank�s total income grew by 19% over the previous year to GH₵124million, which was mainly supported by growth in its loan book portfolio.
The bank recorded a profit before tax of GH₵13.5million, which is half of the previous year�s figure. As a result of its financial performance, the bank has decided against paying dividends to shareholders in the year under review.
The CEO of UT Bank, Captain (rtd.) Prince Kofi Amoabeng, said the bank�s performance for last year reflected the real-state of the economy.
He said the bank�s commitment to the SME sector, which was the hardest hit in the economic condition of the country, caused the bank to be negatively impacted.
�This is a rare experience for UT Bank. We simply did not do well. The fact is that 2013 was a very difficult year for Ghanaians generally; and as a unique bank for Real people, when the real people are suffering their bank will also suffer a bit,� he said.
Managers of the bank have pledged to turn its fortunes around by instituting measures that will facilitate access to cheap funds, and also by strengthening its risk management processes.
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