BoG – Beige, Sovereign & Construction Banks obtained licenses falsely

• Posted on August 1, 2018
• by Ellsamwise King
• Comment

Three of the five banks consolidated under the banner of Consolidated Bank Ghana Limited by the Bank of Ghana, obtained their banking licenses by false pretenses.

The banks in question are Sovereign Bank, The Beige Bank and Construction Bank.

“In the case of Sovereign Bank Limited, as part of Bank of Ghana’s investigations into the failure of Capital Bank Limited (currently in receivership), it emerged that Sovereign Bank’s licence was obtained by false pretenses through the use of suspicious and nonexistent capital,” the Bank of Ghana boss, Dr. Ernest Addison stated at a press conference on Wednesday.

“Beige Bank and Construction Bank were each granted provisional licenses in 2016 and launched in 2017. Subsequent investigations conducted by the Bank of Ghana, revealed that similar to the case of Sovereign Bank, both banks obtained their banking licences under false pretenses through the use of suspicious and non-existent capital, which has resulted in a situation where their reported capital is inaccessible to them for their operations.”

Sovereign Bank Limited was licensed as a universal bank in January 2016 and began operations in April 2016.

Construction Bank was licensed in May 2017 and commenced operations in December 2017.

The Beige Bank commenced banking operations in December 2017 after previously operating as a savings and loans company.

The other banks merged under the Consolidated Bank Ghana Limited are Royal bank and uniBank.

Making the announcement at a press conference on Wednesday, the Bank of Ghana boss, Dr. Ernest Addison said Consolidated Bank Ghana Limited was assuming “all liabilities of these five banks.”

“The government has also issued a bond of GHc5.76 billion to cover the gap between the liability and assets assumed by the Consolidated Bank,” he added.

Dr. Addison stated that there was a grand plan underlying this merger as “the Consolidated Bank Ghana Ltd is expected to play a strategic role in the transformational agenda of the government.”

GHc400 million capital requirement struggle.

The Bank of Ghana gave the banks in Ghana until the end of 2018 to raise a GHc400 million new capital requirement or risk being shut down or becoming a microfinance or savings and loans institutions.

Whereas the foreign-owned banks are not complaining, the local ones had asked the Bank of Ghana to give them some time to recapitalize.

They also petitioned the Presidency to intervene on their behalf.

But the central bank among other things advised them to join forces and recapitalize or risk having their licenses revoked.

The Governor of the Bank of Ghana, Dr. Ernest Addison about a week ago disclosed that some 15 banks are set to meet the new minimum requirement which meant that 19 others would have to resort to various options available to them in order not to miss the deadline.

GN, Sahel and Premium banks to merge

Three local banks — Premium, GN and Sahel Sahara banks have already agreed to merge.

The three banks according to reports, commenced the merger talks this year and finalized the deal this month- July 2018.

The deal is however yet to be approved by the central bank which has received the proposal.

If approved, it will be the first merger which will be undertaken by local banks as part of moves to meet the minimum capital bank.

Capital, UT bank collapse

The Bank of Ghana announced the collapse of UT and Capital banks about a year ago, allowing GCB Bank to take over the two insolvent banks.

In March 2018, the central bank again announced that indigenous bank; uniBank,was also on the verge of collapse, and was taken over, with audit firm, KPMG Ghana as the administrator.

Again, in May 2018, BoG announced the appointment of an adviser to directly supervise operations of Sovereign Bank which the central bank claimed faced governance and capitalization challenges.

Source: CNR