After two years of unprecedented revocation of licences from banks, microfinance companies, and now savings and loans and finance houses, the Bank of Ghana (BoG) has confirmed that it has finally come to an end with its clean-up of the banks and special deposit-taking sector.
On Friday, it released a list of 23 savings and loans and finance houses whose licences have been revoked due to high levels of insolvency, weak corporate governance and over-exposure to related parties – which now allows the rest of such institutions to work hard toward regaining the trust of their existing and potential clients.
“The Bank of Ghana has with effect completed its clean-up of the banking, specialised deposit-taking (SDI) and non-bank financial institutions (NBFI) sectors which began in August 2017,” the regulator said in a statement announcing revocation of licences from the S&Ls and finance houses.
In total, licences of nine universal banks, 347 microfinance companies – of which 155 had already ceased operations; 39 micro credit companies/moneylenders – 10 of which had already ceased operations; 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions that had already ceased operations have been revoked.
Despite the Bank of Ghana’s assertion that job losses will be minimal, the total of jobs lost could be more 5,000; but, crucially, the funds of depositors, the BoG assures, are going to be safe and will be returned to them upon completion of due diligence by the receivers.
“The Bank of Ghana is committed to ensuring that the banking, SDI, and NBFI sectors remain resilient, inclusive, and supportive of Ghana’s economic growth trajectory,” it said in its statement.
To ensure that the remaining institutions remain resilient going forward, the Bank of Ghana added that it will remain vigilant; intensify on-site examinations and enforcement actions including the application of sanctions for non-compliance with statutory, prudential and other requirements; and ensure that early warning signs of distress are mitigated by regulated institutions expeditiously.
The central bank added that will also work with ARB Apex Bank to reposition the rural and community banking sector, so as to enable them better support rural economic development.
Also, it said, in partnership with the government of Ghana, the regulator will launch the commencement of operations for the Ghana Deposit Protection Scheme in September 2019 to further strengthen protection of depositors’ interests.
The 23 S&Ls and finance houses
The 23 institutions whose licences have been revoked include Accent Financial Services, Adom Savings and Loans, AllTime Finance, Alpha Capital Savings and Loans, ASN Financial Services, CDH Savings and Loans, Commerz Savings and Loans, Crest Finance House, Dream Finance Company, Express Savings and Loans Company, First African Savings & Loans Company, and First Allied Savings and Loans Co.
The rest include First Ghana Savings and Loans Co., FirstTrust Savings and Loans, Global Access Savings and Loans Company, GN Savings and Loans, Ideal Finance, IFS Financial Services, Legacy Capital Savings and Loans, Midland Savings and Loans Company, Sterling Financial Services, Unicredit Savings and Loans, and Women’s World Banking Savings and Loans.
The revocation of licences from these institutions, the Bank of Ghana noted, has become necessary because they are insolvent even after a reasonable period within which the regulator engaged with them in the hope that they would be recapitalised by their shareholders to return them to solvency.
In line with its commitment to protect depositors’ funds, government has made funds available to enable the Receiver pay depositors after their claims are validated. The Receiver, Eric Nipah, will in due course make an announcement with regard to when and where payments will be made.
The Receiver will also indicate documents required from depositors to facilitate the validation of claims and orderly payment of validated deposits. Other creditors of the failed institutions will be settled by the Receiver upon validation of their claims, and to the extent that the Receiver is able to realise value from the remaining assets of these institutions.