16 August 2017

Ghana: GCB Bank Takes Over UT Bank Ltd. and Capital Bank Ltd.

press release

The Bank of Ghana (BoG) has revoked the Licenses of UT Bank Ltd. and Capital Bank Ltd., Dr Ernest Addison, Governor, BoG, announced at a news conference in Accra, yesterday.

Consequently, BoG, Dr Addison said, had approved a Purchase and Assumption (P&A) transaction with GCB Bank Ltd. that transferred all deposits and selected assets of UT Bank Ltd and Capital Bank Ltd to GCB Bank Ltd.

To that effect, the main offices and branches of UT Bank and Capital Bank will now be under the control of GCB bank; customers of UT Bank and Capital Bank are now customers of GCB bank; and all deposit customers will continue to have access to their funds.

Furthermore, UT Bank and Capital Bank branches and ATMs will continue to operate as normal as GCB bank branches and ATMs and all staff, in the interim, will become staff of GCB bank and GCB Bank will negotiate the terms of their contract.

In addition, the remaining assets and liabilities of UT Bank and Capital Bank will be realized and settled, respectively, through a receivership process to be undertaken by Messers Vish Ashiagbor and Eric Nana Nipah of PricewaterhouseCoopers (PwC).

This action by BoG, Dr Addison said, had become necessary due to severe impairment of the capitals of UT Bank Ltd. and Capital Bank Ltd.

He explained that the two banks were heavily deficient in capital and liquidity and their continuous operation exposed the financial system to instability and depositors' funds to risks.

He disclosed that Restructuring and Capitalization plans submitted by the two banks, upon a request by BoG, were found to be unacceptable.

Dr Addison said GCB was, therefore, selected among 3 others on the basis of purchase price, cost of funding, branches to be retained, staff to be employed and impact on the acquiring bank's capital adequacy ratio.

He said the objective of the approval by BoG of this transaction was to strengthen Ghana's banking sector, ensure financial stability and protect depositors' funds, adding that the action was in line with BoG's broad objective of positioning the financial sector to support the government's transformation agenda.

He re-assured the public that all customers could continue normal banking business at all UT Bank and Capital Bank facilities which were now branches of GCB bank.

Dr Addison also reassured customers of UT Bank and Capital Bank that their monies were safe and that they could continue to do business at their respective branches which were now the branches of GCB Bank.

The Banking and Specialized Deposit-Taking Institutions (SDI) Act, 2016 (Act 930) provides that undercapitalized banks be given 180 days to correct their capital position and that these banks should reach a minimum capital adequacy of 5 per cent in 90 days and 10 per cent in 180 days.

BoG is, therefore, mandated under the law to revoke the licenses of insolvent banks and banks that are likely to become insolvent.

Source: ISD (G.D. Zaney)

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