Board and management of GCB Bank have been accused of abusing the right of shareholders for not deciding with shareholders before moving on with the takeover of UT Bank Ltd and Capital Bank Ltd.
Mr Isaac Adongo, a financial analyst and a member of parliament has said, Bank of Ghana had no sole power to authorize GCB to takeover UT Bank and Capital Bank without shareholders involved in the decision.
GCB is a listed bank with shareholders. Individuals and corporate entities such as SSNIT owns share in GCB. But, hardly can anyone proof that, there was a shareholder meeting to deliberate and further gave approval to GCB to go ahead to take-over the two banks. There is no mention of any ordinary or extra-ordinary shareholders meeting of GCB over the takeover issue, so is the BoG now the sole decision maker for GCB?
This is abuse of shareholders right to decision making.
However, Mr Adongo smells a foul play or deliberate attempt by the government led by the Finance Minister and the Bank of Ghana to use GCB doll out taxpayers monies to their cronies who are major shareholders of these two banks.
GCB has taken over UT Bank Ltd and Capital Bank Ltd as the two banks were struggling to operate financially.
A statement issued by the Bank of Ghana on Monday August 14 said: “The Bank of Ghana has approved a Purchase and Assumption transaction with GCB Bank Limited that transfers all deposits and selected assets of UT Bank Ltd and Capital Bank Ltd to GCB Bank Ltd. The Bank of Ghana has revoked the licenses of UT Bank Ltd and Capital Bank Ltd. This action has become necessary due to severe impalement of their capital. The remaining assets and liabilities will be realised and settled respectively through a receivership process to be undertaken by Messers Vish Ashiagbor and Eric Nana Nipah of PricewaterhouseCoopers.
“The main offices and braches of UT Bank and Capital Bank will be under the control of GCB Bank and will be opened at 1 PM today for normal business transactions”, the statement stated.
But, Mr Adongo who is against the manner in which the transaction was conducted has poited a number of mind burgling questions and facts which needs immediate answers from the BoG and GCB.
“GCB has no responsibility or soever to bailout any collapsing bank in the country. It is only being regulated by BoG and not owned by BoG. GCB is owned by shareholders and at what point in time did GCB shareholders take the decision and gave approval to allow GCB to takeover the two ‘toxic assets’? Do we have any evidence of Ordinary or Extra-ordinary shareholders meeting, which includes myself, giving approval to GCB?
“Again, GCB is a listed bank on the Ghana Stock Exchange (GSE) and so such decisions of takeover will have to be approved by the board of the Securities and Exchange Commission (SEC), but as I speak now, the board of SEC is not in place, so who gave the approval to GCB to go ahead with the takeover transaction, a transaction which has the potential to derail the progress of GCB?”, Mr Adongo quizzed.
He further noted that, as at now the financial commitment in the transaction is not known. “The assets and nature of liabilities of the two banks are not known to the general public and key stakeholders of GCB.”
The GCB takeover of UT Bank and Capital Bank has generated a lot of brouhaha over the surprising decision. Many experts have registered their concerns, hopes and fears of the action of GCB and BoG.
However, a new information reaching Economy Times is that, a research conducted by a former Head of the Department of Finance at the University of Ghana Business School, predicted UT bank’s collapse months before it folded.
The researchers, Professor Anthony Aboagye and Effa Ahinkrah in their report indicated that, some thirteen banks, including the UT Bank were on the verge of collapse.
According to the findings, most of the banks sampled did not diversify their loan portfolios; a situation the researchers said had the tendency to collapse those institutions.
Professor Aboagye while throwing more light on the research said they predicted imminent doom for some three banks which included a big bank in Ghana, but did not mention the names.
He however noted that Capital bank was not captured in the research because “they were fairly new and got their universal licence in December 2013 and we had started charting these banks as far back as 2011 so we did not include Capital in what we did simply because there was not enough data for them but UT bank, we did and it was one of them [predicted to collapse].”
Apparently, Dr Anthony Akoto Osei, Minister of Monitoring and Evaluation and also Member of Parliament has said, players in the banking sector in Ghana are not amazed by the takeover of UT and Capital banks by GCB.
According to him, the two banks had been struggling over the years, therefore it was necessary that the Central Bank, the Bank of Ghana, stepped in swiftly to rescue depositors.
He stated that: “This is not surprising because we all knew the two banks were struggling. Anybody who was close to the banking sector knew this and so we are all not surprised.
“We commend the Bank of Ghana for the swift manner in which they moved in to save the bank and the customers, the problems of these banks started over a year now and so the takeover was right.”
Meanwhile, the Ghana Stock Exchange (GSE) with effect from Monday, August 14, 2017, suspended the listing status of UT Bank Limited indefinitely.
Having failed to publish its financial results since the end of its financial year December 31, 2015, UT, the GSE explained, was in breach of the continuing listing obligations under the GSE Listing Rules.
“The suspension has also become necessary due to the revocation of the licence of UT Bank by BoG effective Monday, August 14, 2017, in a letter to the Exchange dated August 11, 2017. In the said BoG letter, the BoG has approved a purchase and assumption agreement by GCB Bank Limited to acquire the total deposit liabilities and some selected good assets of UT Bank.”
The GSE added that it will continue to collaborate closely with BoG and the Securities and Exchange Commission to ensure that the interest of shareholders of UT Bank are protected in accordance with the GSE Rules and any guidelines or notices that may be issued by BoG.
GCB Bank on Monday assumed the 53 branches of both UT and Capital banks, thereby growing its network to 214 branches across the country. GCB Bank assumed the customer deposits and will also assume select assets working with the Receiver (PriceWaterhouseCoopers).
Mr Ray Sowah, the Managing Director of GCB Bank has said, his outfit with the experience and capacity of running a sustainable and profitable institution over six and half decades, had the mettle to take up the two insolvent banks to build an even stronger bank.
He noted the expanded network of branches would position GCB to attract deposits from various sectors and parts of the country at a much lower cost.
“This will enable us on-lend at lower interest rates for the benefit of the SME sector, long identified as the back-bone of the national economy,” he said.
Mr Sowah said the Bank’s relationship managers would be in close contact with the SMEs and corporate customers to ensure that it provided them with excellent services that would promote the sustainability and profitability of their businesses.
The liquidation of the two banks had become necessary due to the severe impairment of their capital.
-Adnan Adams Mohammed