We will not shield staff complicit in UT, Capital banks collapse – Governor

Governor of the Bank of Ghana, Dr. Ernest Addison, has said that staff of the bank who presided over the collapse of the UT and Capital banks will not be offered any protection.

Already, some key personnel are under investigation by the Economic and Organised Crime Organisation (EOCO) over their various roles, he said.

The two banks, which were taken over by GCB Bank, were found to have liabilities in excess of GH¢2.1 billion of which a bond was issued by the central bank on behalf of government, and the cost of the bond is to be borne by the tax payer.

Dr. Addison has, on several occasions, said poor supervision by the central bank is part of the reasons the two banks failed, insisting that a stronger regulatory function would have done enough to avert the mess the two banks found themselves in.

Commenting on the state of the financial sector, earlier this year, the governor said: “As you would realise by now, poor banking practices, coupled with weak supervision and regulation by the Bank of Ghana has significantly undermined the stability of the banking and other non-bank financial institutions and we all know some of the consequences by now—revocation of licenses of two banks while other banks were placed under comprehensive capital restoration plans.”

With top managers of the two banks under investigations by the necessary security agencies facing possible charges, the governor was questioned by the B&FT regarding what punitive measures the bank’s staff under whose watch the two banks collapsed will face.

According to him, a comprehensive report on the collapse of the two indigenous banks has been submitted to EOCO, adding that “let’s see what EOCO would do with it.”

Troubled banks

The central bank, about a year ago, revoked the licences of the two banks exercising its power under the section 123 of the Banks and Specialised Deposit-Taking Institutions (SDIs) Act, 2016 (Act 930).

It subsequently approved a purchase and assumption agreement which allowed GCB Bank to take charge of the two banks’ deposits while liabilities were to be shifted to PwC, an appointed receiver.

Seven months later, while the collapse of the two banks remained fresh, the central bank announced another decision to put another local bank, uniBank, under administration, appointing KPMG to see to its turnaround.

Tightening supervision

As part of measures to ensure a stronger financial sector, the central bank also set in motion raft of reforms, including increasing the minimum capital requirement to GH¢400 million as well as enforcing the adoption of Basel II and III.

Banks have up to December 31, 2018, to meet the new capital requirement either through fresh capital injection, capitalisation of existing income surplus or a combination of both.

So far, about six banks have already met this requirement while other banks have made moves to merge their operations in order to meet the deadline.

The Basel regulations aim at strengthening the solid foundation of prudent capital regulation, supervision and market discipline, and to enhance further risk management and financial stability.

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