BOG Saves 5 Banks from Collapsing

By Adu Koranteng

The Bank of Ghana has announced the formation of a new bank, Consolidated Bank Ghana Limited, through a consolidation of 5 existing indigenous banks: uniBank, Royal Bank, Beige Bank, Construction Bank and Sovereign Bank.

The government has also injected capital of GHC450 million to capitalize the new Consolidated Bank, making it one of the strongest banks in the country in terms of assets. The Government has issued a bond of up to [GHC 5.76 billion] in favour of Consolidated Bank to bridge the gap between liabilities and good assets assumed by it. Ghana will therefore have another large, strong and better-managed indigenous bank which will help to drive Ghana’s economic transformation.

The Governor also assured all depositors of the five banks that their deposits are safe and no customer will lose their deposits. The Governor of the Bank of Ghana stated that this consolidation has become necessary because of the persistent problems these banks have exhibited with regards to poor corporate governance, poor risk management practices, high non-performing loans, significant related party transactions that were not above board, and regulatory non-compliance.

The consolidation of the five banks achieves the twin objectives of promoting the safety, soundness, and stability of the financial system as well as strengthening Ghana’s indigenous banks. Furthermore, Government is cooperating with indigenous banks to ensure that well managed indigenous banks (singularly or in groups) will meet the GHC400 million Bank of Ghana capital requirement by the end of December 2018.

By the consolidation of the five banks, the existing licences of uniBank, Royal Bank, Construction Bank, Sovereign Bank, and Beige Bank have been revoked by the Bank of Ghana, receivers have been appointed and a new Consolidated Bank Ghana Limited has been established, effective August 1, 2018, to serve customers.