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Directors of UT, Capital banks to declare assets – report recommends

A report detailing the road map drawn by the Bank of Ghana in dealing with the collapsed banks indicates that directors of two of the banks were to be asked to declare their assets.

The two banks in question are UT Bank and Capital bank which collapsed last year and their assets and liabilities assumed by GCB Bank.

The report by the PriceWaterhouseCoopers recommended to the Central Bank to immediately require the directors of the two banks to declare assets.

This was part measures to deal with what investigators and the regulator called breaches of regulations and misuse of Liquidity Support given by the Bank of Ghana.

In view of suggestions that lapses in the work of the Banking Supervision Department of the Bank of Ghana led to the collapse of the banks, the report recommends that the BSD itself be supervised by an external committee.

“This committee should comprise internal and external members and be similar in standing to MPC. Given that BSD has internal shortcomings, it is important to introduce this external supervision. The new committee will be a committee of BoG’s board.”

Below is the full roadmap:

January 26, 2018: Meeting with Boulders Advisors Limited, Joint Receivers and Banking Supervision Department of Bank of Ghana for briefing on [Boulders] report and implementation of findings

January 29 – February 2, 2018: Identify and agree on low hanging fruits asset recovery

January 29 – February 2, 2018: Invite MC Management Services, Pronto Services and Breitling Services regarding payment of commercial paper GHS130m, GHS20m and GHS35m

January 29 – February 2, 2018: Receivers and EOCO invite Board of Capital Bank to explain Utility of Liquidity support of GHS620m and conditional payment of GHS27.5m by Board

January 29 – February 8, 2018: Inventory related business assets of Board members and related parties (Companies, realty such as Labone property, Dansoman property, oceanic Bottling Company, vehicles)

Immediately: All shareholders and ex-directors of Capital bank financial market institution for a period of undertake a written commitment of prohibition from any 5 years

Immediately: Declaration of Assets by Shareholders and Directors of Capital Bank

Immediately: Receivers / BoG to request Board of Sovereign Bank to resign

Immediately: Receiver/BoG to request shareholders of Sovereign bank to transfer all shares to Receiver

Immediately: Old Board of Sovereign Bank to be requested to assist recovery of investments placed with Nordea Capital

Immediately: Receivers with BoG approval, to appoint interim (for two years) management to manage the bank on a consulting basis

Immediately: Asset Quality Review to be immediately undertaken on Sovereign Bank to ascertain quality of Bank assets

Immediately: All shareholders and ex-directors of Sovereign undertake a written commitment of prohibition from any financial market institution for a period of 5 years

Immediately: Declaration of assets by Shareholders and Directors of Sovereign bank

Immediately: Receivers / BoG to request Board of Sovereign Bank to resign

Immediately: Receiver/BoG to request shareholders of Sovereign ban to transfer all shares to Receiver

Immediately: Old Board of Sovereign Bank to request to assist recovery of investments placed with Nordea Capital

Immediately: Receivers with BoG approval, to appoint interim management to manage the bank on a consulting basis for two years

Immediately: Asset Quality Review to be immediately undertaken on Sovereign Bank to ascertain quality of Bank assets

Immediately: All shareholders and ex-directors of Sovereign undertake a written commitment of prohibition from any financial market institution for a period of 5 years

Immediately: Declaration of assets by Shareholders and Directors of Sovereign bank

Immediately: Receivers/BoG invite shareholders and board of directors of UT Bank to address settlement of related party placements and debts GHS71.6m and US$14.3m

Immediately: All shareholders and ex-directors of UT Bank undertake a written commitment of prohibition from any financial market institution for a period of 5 years

Immediately: Declaration of Assets by Shareholders and Directors of UT Bank

Immediately: Receiver with the assistance of Bank of Ghana, Financial Intelligence Centre, Central Securities Depository and Registrar Generals’ Department assemble registered and financial assets of all shareholders and board of directors of Capital Bank and UT Bank including related family members (spouses, children and parents)

Immediately: BoG should first set up an internal financial stability committee which reviews the BoG’s internal supervision and licensing reports. It is important that BoG audits these internal reports prior to any steps being taken in coordination with other regulators. This committee should comprise internal and external members and be similar in standing to MPC. Given that BSD has internal shortcomings, it is important to introduce this external supervision. The new committee will be a committee of BoG’s board

Immediately after BoG Financial Stability Committee is set up: BoG should establish an inter-regulatory committee comprising of Securities and Exchange Commission, National Insurance Commission, Financial Intelligence Centre, Ghana Stock Exchange, National Pensions Regulatory Authority and Central Securities Depository to review findings of Eagle project report and to agree a process for strengthening the regulatory framework for the financial services industry

Immediately: Inter-regulatory committee to establish a sanction register list published quarterly to be used in screening ownership, board directorship of sanctioned persons

Immediately: Outcome of regulatory breaches identified by findings of receivers and sanction list to be referred for criminal review and prosecution

Immediately: Investigate related and connected businesses to ascertain beneficial ownership by ex-shareholders and ex-directors of Capital bank and UT bank.

Immediately: BoG should extend the Asset Quality Review by KPMG to cover 2017

Immediately: BoG to review green and brownfield licensing procedures

Immediately: BoG to ensure cash escrow of capitalization

Immediately: Developments and implementation of an industry standard Governance Code of Conduct

Immediately: Annual certifications should be required of all Directors on Financial Risk Management

Immediately: Quarterly certification by Board of Directors and key management of adequate disclosure on related and connected party transactions

Immediately: A two (2) year cooling-off period should be established for former BoG employees as consultants and acceptance of board directorships in any institution regulated by BoG

Immediately: Institute a quarterly certification of BSD key management, licensing and examiners on their dealings with any regulated financial institution

Immediately: Our recommendation is that liquidity support should be issued as a collateralized credit facility to be drawn down on need basis rather than a pool of cash availed to a bank. Every drawdown should be approved for a specific utilization by a BoG appointed advisor. This adviser should also serve on the board of the recipient bank and any drawdown must be accompanied by a note from the recipient’s auditors confirming that the recipient is a going concern as well as a memorandum which is circulated to members of the financial stability committee.

 

 

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