Ghana rolls five failed banks into one, and issues $1.2bn in bonds to keep them afloat
Accra — Ghana’s banking regulator said it created a new lender through a merger of five insolvent banks as the country sold 5.8-billion cedis ($1.2bn) in bonds to clear their debt.
Bank of Ghana revoked the licences of Unibank Ghana, Royal Bank, Beige Bank, Sovereign Bank and Construction Bank, governor Ernest Addison said on Wednesday.
The lenders were among the smallest of Ghana’s 34 previously authorised banks, and the merger is part of increasing efforts to avert failures in an industry that has been beset by poor governance and weak lending.
The five lenders’ assets will be transferred to the newly created Consolidated Bank Ghana, which is fully owned by the government, Addison said. The government will provide the bank with 450-million cedis in fresh capital, he said.
"All deposits of the five banks are safe and have been transferred to the Consolidated Bank," Addison said.
"Customers can carry out their business as usual at their respective banks, which will now become branches of Consolidated Bank."
Consolidated will acquire all deposits, "good assets" and some liabilities of the five lenders, Addison said.
The bond will finance the gap between the liabilities and good assets, and the bank will be headed by Daniel Addo as CEO, he said.
The central bank has intensified its oversight of Ghana’s banking sector in the past year as it announced a more than threefold increase in the minimum capital requirements for lenders, to 400-million cedis.
The regulator placed Unibank Ghana under administration in March and withdrew the licences of two other banks in August for failing to meet capital adequacy thresholds.
The government will, in addition, offer financial support to state-controlled National Investment Bank, Agricultural Development Bank and "other indigenous banks as needed, to help them meet the minimum capital requirement", Addison said. "Such support will be limited to indigenous banks that are solvent, well governed and managed."
The administrator that was appointed for Unibank found that the lender "was beyond rehabilitation" after shareholders and related parties took out 5.3-billion cedis in loans and other withdrawals without following due process, Addison said.
Royal Bank’s nonperforming loans constituted 79% of all loans granted, while Sovereign, Beige and Construction obtained their operating licences "by false pretences through the use of suspicious and nonexistent capital", he said.
Construction Bank CEO Stephen Kpordzih declined to comment when contacted by phone. Calls to the offices of Sovereign Bank, Royal Bank and Beige Bank did not connect. A spokesman for Unibank was not available when called at his office.