Following the revocation of the licenses of the five banks (Sovereign Bank, Beige, Construction Bank, Royal Bank and UniBank) on August 1, 2018, which were consolidated into the aptly named Consolidated Bank Ghana (CBG), government issued a bond with a face value of GHc 7.6 billion to cover the gap, between the deposit liabilities and the remaining good assets of the failed banks. Government hopes to recover much of this from the value of the substandard assets that had been on the failed banks books as at the time of their liquidation
However according to the receiver’s latest update on the affected assets and property inventory of these banks, which were released by the Bank of Ghana last week, the liabilities are much more than anticipated above the reclassified and adjusted assets of the banks indicating a less than originally expected likelihood for government to recover most of the value of the bond issued to finance the establishment of a viable balance sheet for CBG.
Data from the report indicates that most of the banks placed under receivership had been overstating the values of their assets and understating the value of their liabilities, as figures presented in the updated report showed major downward adjustments in the values for the assets and similar increases in liabilities, after the valuation adjustments made by the receiver, Nii Amanor Dodoo of KPMG.
The balance sheets of three out of the five banks showed very high overstatements of asset values. Before the adjustments, Sovereign, Beige and The Royal Bank recorded totals of about GHc 462 million, GHc 2.428 billion and GHc 1.004 billion respectively, as against GHc 191 million, GHc 499 million and GHc 376 million reported after adjustment and reclassification have been made by the receiver.
UniBank and the Construction Bank did not have significant differences however. UniBank recorded total assets of GHc 2.204 billion before adjustments and GHC 2.199 billion after adjustments were made, whereas Construction Bank recorded GHc 26 million before the adjustment and GHc 24 million after adjustment were made.
The total assets of the five banks after adjustments stood at GHc 3.290 billion barely half of the original figure in the books of the banks which was GHc 6.124 billion. However in the case of liabilities of the five banks, the book records of the banks originally had GHc 12.707 billion compared to GHc 13.141 billion after the reclassification and adjustment by the Receiver.
The five banks thus had a combined net liability of about GHc 9.9 billion after the accounts had undergone a reclassification and adjustment. This represents an increase of about GHc 3.3 billion on the total figure claimed by the banks in their respective books before the reclassification and adjustments by the Receiver.
Other matters to be considered
The report indicates that the Ghana Revenue Authority (GRA) and other statutory collecting entities are yet to complete examinations to determine whether there are any obligations or exposures of the Banks that remained unpaid at the date their licenses was revoked.
The recoverable amounts of other assets have also not been fully assessed, whereas the determination of the liquidation values for property and equipment and intangible assets remains in progress.
By Joshua W. Amlanu