UniBank goes under rehabilitation

BoG moves to salvage financial system

The Bank of Ghana (BoG) has appointed an official administrator to take control of UniBank in a move to, according to the banking regulator, “prevent potential losses to depositors and other creditors.”

The decision, according to the central bank is also taken to ensure that the fiscal condition of the bank does not create further risks for the entire financial system.

Announcing the action at a press conference, Governor of BoG, Dr Ernest Addison, said the official administrator, KPMG, with effect from the March 20, 2018, will “assume control of the bank and all its branches and carry out the responsibilities of the shareholders, directors, and key management personnel of UniBank.”

The BoG further said “KPMG will ascertain the state of the bank’s assets and liabilities, and exercise a variety of powers under Act 930 to rehabilitate and return the bank to regulatory compliance and viability within a period of six months, at the end of which the bank will be returned to private ownership and management.”

The appointment of the official administrator is in accordance with Sections 107 and 108 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

According to the central bank, UniBank’s Capital Adequacy Ratio, CAR, was estimated at negative 12.5 per cent, making it technically insolvent as at October 2017, and dropped further to negative 24 per cent by December 2017.

UniBank is reported to have persistently suffered liquidity shortfalls and consistently breached its cash reserve requirement making it rely extensively on liquidity support of over GHS 2.2 billion from the Bank of Ghana over the past two years to meet its recurring liabilities.

The BoG therefore said it discharged its duties per Section 107 of Act 930 which empowers the BoG to appoint an official administrator to take control of a bank when its capital adequacy ratio (CAR) has fallen below 50 per cent of the required minimum of 10 per cent (i.e. below five per cent).

During the period of official administration of UniBank, the bank will remain open for business under the management and control of KPMG overseen by BoG and is not being closed and liquidated.

Touching on the recent reports of a purported pledge of ADB Bank shares to UniBank, the BoG said a request it sent to UniBank to submit copies of the Deed of Pledge and underlying transactional documents were not heeded by UniBank, its shareholders, directors, or management.

BoG has however reassured customers of UniBank that all deposits they have with the bank are, and will remain safe and that they can continue to do business at any of its branches, emphasising, “No depositor of the bank will lose any money.”