Okudzeto Demands Bank Of Ghana, KPMG Probe

Okudzeto-Demands-Bank-of-Ghana-KPMG-Probe.jpg

As UniBank Owners Accuse Them Of Unfairness

The Member of Parliament (MP) for North Tongu, Samuel Okudzeto Ablakwa, has called for a bipartisan investigation into the activities of the Bank of Ghana (BoG), suggesting it could be abusing its statutory powers and obligations towards the commercial banks.

To him, the thousands of people losing their jobs with the collapse of seven commercial banks, is alarming, adding an independent probe could help salvage the situation.

Mr Okudzeto Ablakwa, said this on Metro TV’s Current Affairs show; “Good Morning Ghana” last week Friday.

The BoG last week Thursday, merged five banks namely; Beige, Construction, Royal, Sovereign and Unibank, calming it was part of efforts to restore confidence and trust in our banking system, and to protect depositors and jobs. They’re currently called Consolidated Bank.

Same time last year, BoG, took over Capital Bank and UT Bank and gave them to Ghana Commercial Bank to run. They have since become part of the state-owned bank.

His  call comes as the shareholders of the Unibank, accuse the Central Bank and audit and accounting firm “Klynveld Peat Marwick Goerdeler” popularly called “KPMG” of unfairness in the takeover of the bank.

Led by ex-Bank of Ghana (BOG) Governor, Dr. Kwabena Duffuor, the shareholders in a three-page document, lamented that they were not given a fair hearing, their letters were not responded to and that some calculations were done without them offered the opportunity to rebut the figures.

The letter was addressed to Mr Nii Amanor Dodoo of KPMG, who is the Receiver for the five banks.

The Herald insiders say, he has not responded to the concerns raised by Unibank as at last Saturday.

Dr. Maxwell Opoku Afari, the First Deputy Governor, BoG, has also not responded to the concerns.

Their concerns are coming amid calls for an independent investigations into the banking industry, because BOG, is acting as a player and a judge in its own case, having accused some of the collapsed banks of obtaining their banking license under fraudulent circumstances from BoG officials.

According to Unibank “On 31st May 2018, the Shareholders received a letter from the OA, demanding payments for an amount of GH¢ 4.9 billion as amounts drawn by the Shareholder Group and related parties.

The shareholder at that time protested and indicated that the amounts included interest and other expenses of over GH¢1.2 billion, which are not shareholder related. We also sought for the details of transactions involved, which made up this figure. Additionally, we requested for further clarification on the basis of how the related companies were determined.

In the interest of plugging the GH¢ 4.9 billion gap, the shareholder decided to use this as ball pack figure in addressing the funding requirement of the bank without any prejudice. Subsequent to this, the OA indicated to the shareholders that there has been some further obligations to increase this amount but never formerly communicated the quantum and the related parties involved to the shareholders. It therefore came as a surprise that an amount of GH¢ 5.7 billion has been alleged to be drawn by the shareholder group and related parties and this amount has been used in the report submitted to the Bank of Ghana.

Guide for Financial Publication for Banks, allow the forced sale value of such assets to be treated as “assets held for sale”. The Shareholder presented these assets on the 10th April 2018 and has since been engaging with the OA on the process of perfecting the inclusion of these assets to support the balance sheet. We are surprised that the OA ignored these assets without recourse to the Shareholder simply on the basis that they did not have sufficient time to do so”.

Below is Dr. Duffour’s letter to the KPMG

SHAREHOLDERS OF uniBank (GHANA) LIMITED

P.O.BOX AN 15084

ACCRA-NORTH

The Official Administrator,

KPMG,

uniBank Ghana Limited,

Accra.

31st July, 2018

 

Dear Sir,

 

RE: CONERNS OF THE SHAREHOLDERS OF UNIBANK RAISED AT MEETINGS WITH OFFICIAL ADMINISTRATOR AND THE BANK OF GHANA

We refer to our meeting on the 30th July 2018 on highlights of your June ending financial report on uniBank to the Bank of Ghana and subsequent meeting with the Bank of Ghana on same. We wish to formerly reiterate our concerns on aspects of your report that we consider grossly inappropriate and very worrying.

Impairment of Assets

  • The Official Administrator (OA) has impaired the entire loan book of over GH¢4.0 billion as at June 2018. This includes government and quasi-government receivables of close to one billion Ghana Cedis (GH¢1.0 billion) for which Interim Payment Certificates (IPCs) have been issued. The IPCs qualify as collateral under section 2.2.3 of the Bank of Ghana’s Guide for Financial Publication for Banks for the purpose of impairment or provisioning. However, this was totally ignored by the OA and the full amount impaired. This action could potentially trigger cross-default of government exposures with obviously very huge implications for the financial system.
  • The net loan position as at 31st December 2017, after Bank of Ghana’s various examinations last year stood at about GH¢ 3.75 billion, constituting about 85% of the gross loan book.
  • Obviously, after four months of inactivity on the accounts under the OA, some facilities would become non-performing just by counting the days. It is quite surprising that, in an exercise to assess the worth of a bank under administration, the loan book can be totally written off/impaired within a period of six months, indicating that there is no recoverable amount or even collateral assets that can be realized. From the Bank of Ghana’s previous examinations, we do not believe that even in such situations, loan loss allowances would be increased beyond 50%.
  • Assets provided by Shareholders valued at GH¢4.4 billion with a forced sale value of about GH¢ 3.52 billion to be liquidated or leveraged for injecting liquidity was totally ignored in the June 30th financial position of the bank. Sections 2.2.3 and 2.2.4 of the Bank of Ghana’s Guide for Financial Publication for Banks, allow the forced sale value of such assets to be treated as “assets held for sale”. The Shareholder presented these assets on the 10th April 2018 and has since been engaging with the OA on the process of perfecting the inclusion of these assets to support the balance sheet. We are surprised that the OA ignored these assets without recourse to the Shareholder simply on the basis that they did not have sufficient time to do so.
  • We request the OA to continue to engage the shareholder for all the necessary documents required to ensure that this exercise is completed to enable you include the forced sale values of these assets as “held for sale” in the financial position of the bank as at 30th June 2018.

Demand on Shareholder

  • On 31st May 2018, the Shareholders received a letter from the OA, demanding payments for an amount of GH¢ 4.9 billion as amounts drawn by the Shareholder Group and related parties.
  • The shareholder at that time protested and indicated that the amounts included interest and other expenses of over GH¢1.2 billion, which are not shareholder related. We also sought for the details of transactions involved, which made up this figure. Additionally, we requested for further clarification on the basis of how the related companies were determined.
  • In the interest of plugging the GH¢ 4.9 billion gap, the shareholder decided to use this as ball pack figure in addressing the funding requirement of the bank without any prejudice.
  • Subsequent to this, the OA indicated to the shareholders that there has been some further obligations to increase this amount but never formerly communicated the quantum and the related parties involved to the shareholders. It therefore came as a surprise that an amount of GH¢ 5.7 billion has been alleged to be drawn by the shareholder group and related parties and this amount has been used in the report submitted to the Bank of Ghana.
  • The validation of these figures is of utmost importance. For example, at the meeting with the Deputy Governors at the Bank of Ghana, the OA indicated that the additional items in determining the enhanced amount of GH¢ 5.7 billion included a facility of GH¢200 million to uniSecurities Limited. However, this amount had already been included as part of the earlier amount of GH¢ 4.9 billion. This a clear indication that before any amount is crystalized as an outstanding obligation of the shareholders, it should have been properly vetted and agreed by both parties.

Liquidity

  • As at June 30th2018, the bank’s unsecured BOG borrowing or liquidity support stood at GH¢ 2.38 billion with secured BOG Borrowing of GH¢ 0.652 BOG billion.
  • Government and quasi government debt owed to the Bank amounted to GH¢0.86 billion giving rise to a nominal liquidity gap of GH¢ 1.36 billion.
  • At the time of the announcement of the OA, uniBank was expecting the payment of government and quasi government debt of approximately GH¢1.0 billion. In addition to this, the Belstar group had pledged the injection of expected proceeds of GH¢700 million from the sale of their ADB Bank shares into uniBank
  • These payments would be sufficient to stabilize the bank in the interim for a smooth operation in anticipation of the injection of funds as proposed by the Shareholders. The decision to allow this short-term liquidity measure, however, strictly lies in the bossom of the Bank of Ghana and the Ministry of Finance.
  • We therefore urge the OA as the managers of the bank to liaise with the Bank of Ghana and the Ministry of Finance to ensure a timely payment of these outstanding amounts to stabilize the bank in the interim.
  • Meanwhile, the Shareholders are assiduously working with a first class international bank on their confirmed offer to bring in the first tranche of US$200.0 million to improve the liquidity and solvency of the bank. This will immediately be followed by the second tranche of US$200.0 million as indicated by the shareholder.

Thank you for your kind consideration.

 

Yours sincerely,

Dr. Kwabena Duffuor

Shareholder

CC:       Dr. Maxwell Opoku Afari

The First Deputy Governor, Bank of Ghana

 

Share News

submit to reddit