The recent closure of UniBank and four other banks by the Bank of Ghana (BOG) to form the Consolidated Bank has raised many questions concerning the process undertaken to arrive at the final decision of collapsing these banks.

The BOG gave different reasons for why each bank was deemed a failure and shut down but the haste with which the decision was taken and the failure of the central bank to attempt even the perfunctory of measures to revive the banks involved truly raise questions about the motive behind the decision and whether the BOG acted as a fair arbiter or a biased tyrant.

In a brilliant feature piece, Mark Kofi Poku has looked at the issue in his article titled 'Bank Closure: Was The Bank Of Ghana A Prosecutor And A Judge In Its Own Court?'.

Mark Poku lays down a compelling case in his article, based on the facts of the ground, which shows why the decision taken by the central bank, particularly in relation to uniBank, was a very flawed one.



He argues that revocation of a bank's license should be a last resort and before it happens exhaustive efforts must have been made to save the bank, which was not done by the Bank of Ghana in relation to uniBank.

There are numerous examples of the BOG snubbing common sense measures which could have saved the bank if taken but were ignored in order to achieve the desired outcome of the prosecutor cum judge that was the Bank of Ghana.

Earlier this year the Bank of Ghana placed uniBank under the administration of auditing firm KPMG to attempt to revive and stabilize the bank which had been found to be having some problems.

"In line with the requirements of Act 930, KPMG submitted an Inventory of Assets and Liabilities of uniBank (Ghana) Limited on 20th April 2018 (30-day report), and a report on the Financial Conditions and Future Prospects of uniBank (Ghana) Limited on 20th June 2018 (90-day report) to the BOG." Poku writes.



The BOG used this report as its basis for collapsing Unibank, declaring it insolvent and with no reasonable prospect of recovery even though shareholders of uniBank did not have a chance to view the report.

Interestingly, a letter from KPMG to the government had laid down a reasonable path to resuscitate uniBank, which was to let government pay the bank approximately the GH¢ 868, 973, 599.10 of debts owed it by agencies such as Cocobod, the ministry of finance, road fund and Getfund.

Even though government acknowledged receipt of the KPMG letter, the debts were not paid and its unknown if the Bank of Ghana considered this very important factor in making its decision to collapse uniBank. How reasonable is it for a government not to pay over Ghc 860m worth of debt owed uniBank yet waste Ghc 450m of taxpayer money to set up this so-called Consolidated Bank?

Another variable not considered is that shareholders of uniBank contested the KPMG financial report of the bank for June 2018 in a letter addressed to KPMG and signed by Dr Kwabena Duffour.



Mark Poku queried in his piece?

"Key issues raised in the said letter include;

The impairment of the entire loan book of unibank of over GH¢ 4 billion as of June 2018 by the official administrator. This included close to 1 billion of receivables from government and quasi-government agencies of which interim payment certificates were issued.

The Assets provided by shareholders valued at GH¢ 4.4 billion with a forced sale value of about 3.52 billion to be liquidated or leveraged for injecting liquidity were totally ignored in the June 30th financial position of the bank, disregarding the bank of Ghana’s guide for financial publication for Banks which allow forced sale value of assets to be treated as “assets held for sale”. These assets presented to the OA on 10th of April were ignored without recourse to the shareholders on the basis that the OA did not have sufficient time to validate its inclusion to support the balance sheet.

An initial amount of GH¢ 4.9 billion that later jumped to GH¢ 5.7 billion alleged to have been drawn by the shareholders' group was contested. Proper vetting and validation of the figures were not concluded but the said amount was included in the report presented to the BOG.

Why were the above concerns of the shareholders not addressed before the sudden revocation action was made?"

The nail in the coffin of the case proving the central bank did not follow due process to save uniBank but rather hastened its end for its own parochial interests lies in the provisions of Section 115 of the Bank of Ghana Act 930.
Section 115 stipulates that:



Capital increase by existing shareholders

115. (1) On the basis of the report produced under section 114 and with the approval of the Bank of Ghana, the official administrator may for the purpose of increasing the capital of the bank or specialized deposit-taking institution through the issuance of new shares to existing

1. (a) determine the extent of losses and prepare the financial statements of the bank or specialized deposit-taking institution covering the amount of the losses, profits, reserves and

2. (b) notify existing shareholders of the amount of additional capital needed to bring the capital of the bank or specialised deposit-taking institution into compliance with all capital requirements and allow such shareholders to subscribe and purchase additional shares, by submitting binding commitments equal to the full amount of additional capital needed within five working days of such notification.

(2) Where an existing shareholder of a bank or specialized deposit-taking institution is unable to subscribe and purchase additional shares as provided under subsection (1), the official administrator shall have the right to invite another person or persons to subscribe and purchase the unsubscribed additional shares.



Based on the provisions of section 115 various questions arise including:

• Were the plans of uniBank's shareholders to recapitalize the bank considered by the BOG?

• How much opportunity was given to shareholders of uniBank to salvage their bank as stipulated by the Act?

• Why was a $400m loan guaranteed by a first class international bank to be injected into uniBank to improve its solvency ignored by the BOG in reaching its conclusion?

• Did the official administrator invite other parties the opportunity to purchase the unsubscribed additional shares as stipulated in the act?

Based on all these holes in the process taken by the central bank to collapse uniBank -- ignoring common sense solutions to achieve the desired outcome of uniBank's insolvency -- Mr Poku concludes...

The haste of the BOG to revoke unibank’s license without following its own ACT reveals a disposition towards an agenda to crush the “wobbly legs” of a bank saddled with corporate governance issues that needed fixing.



Is it fair to throw the baby out with the bathwater?

The shareholders of these banks have been unfairly treated and demonized without a least opportunity to salvage their investment.

This regulatory approach has negative implications in attracting investment and encouraging entrepreneurship in the country.

We cannot build the strong resilient economy conducive for both internal and external investment when regulators who are supposed to be fair, firm, politically independent, act as prosecutors and judges in their own court.

The best way forward is for parliament to step in with an independent committee with support from experts to review the KPMG report that formed the basis of BOG’s decision.

This article draws from an editorial by Mark Poku titled 'Bank Closure: Was The Bank Of Ghana A Prosecutor And A Judge In Its Own Court?'