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Business News of Tuesday, 22 August 2017

Source: Graphic.com.gh

UT, Capital banks shareholders sure of recouping investments - President of GSE Shareholders

Shareholders of the collapsed UT and Capital banks are optimistic of recouping their investments, although experts say the shareholders can lose out completely should the liabilities of the two defunct banks exceed their assets.

The President of the Association of Shareholders on the Ghana Stock Exchange (GSE), Mr S.A.S. George, told the Daily Graphic last Friday that “all our money in the UT or the Capital Bank is secure because all the shares we bought are recorded at the Central Securities and they will not deny that”.

He said the optimism of the association was further bolstered by a circular that he and other shareholders received from the Central Securities Depository (Gh) Limited (CSD) that was issued to stakeholders and the investing public on the heels of the collapse of the banks on August 14.

The circular announced the withdrawal of the membership status of the two banks as depository participants (DPs) of the CSD, following the revocation of their licences and subsequent takeover by GCB Bank.

It, however, explained that the withdrawal did not affect money market transactions, equity and securities trades between an investor and the erstwhile banks that happened before August 14.

“Money market transactions between a market participant and the UT Bank or the Capital Bank, equity trades involving UT Bank shares and debt securities purchased through the UT Bank and the Capital Bank and deposited with the CSD executed before Monday, August 14, are safe and secure,” the statement said.

Using that as a basis, Mr George said shareholders of the two failed banks need not fear but remain calm as the receiver, PricewaterhouseCoopers (PwC), worked out a possible payment plan.

The PwC was appointed by the Bank of Ghana (BoG) as a receiver in the historic takeover of the two illiquid and capital deficient banks.

As a receiver, the accounting consulting firm is expected to realise the two banks’ assets, pay off creditors and subsequently match returns from the remaining assets to liabilities to be able to determine the next move.

A surplus would mean that shareholders will be paid; a deficient means some shareholders and directors could be made to raise some money to defray the debt.



Emergency meeting

Mr George was speaking four days after the BoG revoked the licences of the UT and the Capital banks after finding that they were heavily deficient and illiquid in capital.

Following the revocation, the central bank approved a purchase and assumption (P&A) agreement with GCB Bank to assume ownership of the deposits and selected assets (performing assets) of the now defunct banks.

The BoG and GCB Bank are yet to define what constitutes a performing asset in this case.

The revocation of the licences and the approval of the P&A were in line with the Banks and Specialised Deposits-taking Institutions Act, 2016 (Act 930), which was passed last year to help define a mechanism that the central bank could fall on to protect deposits whenever banks go through distress circumstances.

Although the action automatically transferred customers and employees of the erstwhile banks to the largely state-owned GCB Bank, it placed the fate of shareholders of the two banks in the hands of PwC.

Given that GCB Bank did not take over the entirety of the two failed banks but only their deposits and performing assets, shareholders of the two banks cannot be transferred to the enlarged GCB but could possibly be paid off through a scheme that will be devised by PwC later.

While that created some vacuum in the minds of the affected shareholders, Mr George said there was no need to panic.

“There is actually nothing to fear. I can say for sure that our investments are secure and I am not worried,” he said.

To help calm nerves, Mr George, himself a shareholder of the erstwhile UT Bank, said the association intended to meet its members in the coming days to reassure them that their investments in the failed UT Bank were in safe hands but would only be determined after the situation had normalised.

He said the education would be done by experts from the CSD, which serves as a vault for investment information in the country.



“We want to educate our members about this takeover. We want to tell them that they should not bother or worry because their money is in good hands at the CSD,” he said.

“I have shares in UT and I believe that our shares are held at the moment by the GSE until things are normalised,” he added.

As of December 2013, the UT Bank had 456.3 million shares in the hands of 9,838 shareholders.