It has emerged that shareholders of uniBank used monies from the bank to acquire estate properties in their own names.
According to the central bank “uniBank’s shareholders and related parties admitted to acquiring several real estate properties in their own names using the funds they took from the bank under questionable circumstances”.
The governor of the Bank of Ghana, Dr. Ernest Addison made the disclosure after revoking the licenses of five banks—uniBank, Sovereign Bank, Construction Bank, Royal Bank, and Beige Bank.
Dr. Addison declared that the five banks have been consolidated into one, named Consolidated Bank Ghana Limited.
Giving more details on the rot that went on in uniBank, Dr. Addison stated that Promises by the shareholders and related parties to refund the monies by mid-July 2018 and legally transfer title to assets acquired back to uniBank failed to materialize.
“Based on the Bank of Ghana’s review of KPMG’s assessment of the financial condition of uniBank, the Bank of Ghana has concluded that uniBank is insolvent and has no reasonable prospect of rehabilitation or a reasonably credible path to viability”.
uniBank grants GHS61m loan to Construction Bank
In addition the governor disclosed that uniBank granted a loan of 61 million cedis as initial minimum paid-up capital for Construction Bank contrary to the Bank of Ghana’s regulations.
Despite this, the monies that were advanced by uniBank to Construction Bank remains inaccessible.
uniBank gives 3.7bn to shareholders
Dr. Addison stated that uniBank gave out amounts totaling GH¢1.6 billion to shareholders and related parties in the form of loans and advances without due process and in breach of relevant provisions of the Bank of Ghana Act 930.
“In addition, these shareholders and related parties had also been given amounts totaling GH¢3.7 billion which were neither granted through the normal credit delivery process nor reported as part of the bank’s loan portfolio. They were also not secured with collateral, and attracted no interest income for uniBank”.
He pointed out that altogether, shareholders and related parties of uniBank had taken out an amount of GH¢5.3 billion, constituting 75 percent of total assets of the bank; out of total customer deposits of GH¢4.3 billion, GH¢2.3 billion was not disclosed to the Bank of Ghana.
“Loans and advances to customers were also overstated by GH¢1.3 billion in prudential returns to the Bank of Ghana while over 89% of uniBank’s loans and advances book of GH¢3.74 billion as of 31st May 2018 was classified as non-performing”
It would be recalled that on 20th March 2018, the Bank of Ghana appointed KPMG as Official Administrator (OA) for uniBank to help ascertain the true financial condition of the bank, protect depositors’ funds held by the bank, and explore how the bank could be returned to viability within a period of no later than six months.
In line with the requirements of Act 930, KPMG submitted an Inventory of Assets and Liabilities of uniBank (Ghana) Limited on 20th April 2018 (30-day report), and a report on the Financial Conditions and Future Prospects of uniBank (Ghana) Limited on 20th June 2018 (90-day report).
KPMG’s reports confirmed, based on a detailed review and validation of the financial condition of uniBank that the bank was balance sheet insolvent at the time of their appointment as official administrator and remains so.
As official administrator, KPMG made efforts to ascertain the assets and liabilities of the bank and evaluated options for turning around the bank’s fortunes. KPMG, however, found that the bank’s operations are not sustainable.
Among other things, the bank’s interest income and other sources of income are insufficient to cover the associated cost of funds of underlying borrowings and liabilities, as well as overheads of about GH¢0.31 billion per annum.
A significant portion of the bank’s loan book which forms the largest component of the bank’s assets, is non-performing. The earning capacity of the bank continues to deteriorate.
In addition, the bank’s governance and internal control environments have been assessed as weak, with significant deficiencies in credit underwriting and loan approval process, compliance and reporting.
According to the Bank of Ghana Key findings from KPMG’s reports indicated serious corporate governance, risk management, compliance and management flaws, as well as unlawful transactions involving shareholders, related parties, and connected parties.