The Bank of Ghana (BoG) has blocked the accounts of the directors of the defunct UT and Capital banks until investigations into the movement of funds from those accounts are concluded.
The move is to trace whether there were some unusual transactions in those accounts days before the takeover of the two banks by the GCB Bank Limited.
The Head of the Banking Supervision Department of the BoG, Mr Raymond Amanfo, told the Daily Graphic in an interview in Accra yesterday that the restrictions on the accounts were also to halt the movement of funds from those accounts.
“We are only blocking the accounts to find out whether there were any serious movements of funds from those accounts,” he said.
The restrictions on the accounts of the directors follow the central bank’s collapse of the banks due to their inability to turn around their negative capital adequacy position.
That has necessitated a purchase and assumption (P&A) agreement that allows the GCB Bank Ltd to take over all deposit liabilities and selected assets of both the UT and the Capital banks, in accordance with Section 123 of the Banks and Specialised Deposit-taking Institutions (SDIs) Act, 2016 (Act 930).
“We don’t know how many accounts those directors have for now, but the ones that we know have been blocked and when we go into the system, we will find out the others and block them,” Mr Amanfo said.
He said the accounts of the directors had not been frozen but only blocked temporarily to allow for investigations into the recent movements of cash from those accounts.
“It’s not true we have frozen their accounts; we have only blocked them for a while to see whether there were some unusual movements of funds from those accounts,” he said.
He added that the exercise to track and restrict the accounts of the directors was being carried out in all the branches of the defunct UT and Capital banks across the country.
The BoG, in addition to restricting the directors’ access to their accounts, is also conducting a forensic audit into the operations of the two insolvent banks and their directors to unravel the factors leading to the collapse of the two banks.
The audit will seek to ascertain the banks’ compliance with the rules of corporate governance and adherence to proper financial administration.
Corporate governance breaches
At a news conference in Accra last Monday, the Governor of the BoG, Dr Ernest Addison, had said those who breached the corporate governance and financial rules of the banks would face punitive sanctions.
“The last phase of the BoG’s action will involve a thorough investigation of the operations of the UT Bank and the Capital Bank and appropriate action will be taken against shareholders, directors and key management personnel who are found to be culpable.
“The UT Bank and the Capital Bank were heavily deficient in capital and liquidity and their continuous operation could have jeopardised not only their depositors’ funds but also posed a threat to the stability of the financial system.
“It, therefore, became necessary for the BoG to revoke their licences and approve a purchase and assumption (P&A) transaction to allow the GCB Bank, a large bank with the right balance sheet, to take over all deposits and selected assets of the UT Bank and the Capital Bank,” he said.
The UT Bank has six directors, with Captain Joseph Nsonamoahas (retd) the Co-Founder and Chairman of the board, while the Capital Bank too has six directors, with Dr Mensa Otabil as its Chairman.
Pact with IMF
The liquidation formed part of prior actions agreed with the International Monetary Fund (IMF) ahead of the next review of Ghana's three-year aid programme at the end of August.
The GCB Bank is the second largest bank by assets out of the 33 banks operating in Ghana, including the UT and the Capital banks.
"The UT Bank and the Capital Bank were deeply insolvent, meaning that their liabilities exceeded their assets, putting them in a position not to be able to meet their obligations."
Deposits at the two banks were safe and depositors would now become customers of the GCB Bank and they might continue banking at the UT Bank and the Capital Bank branch locations,” Dr Addison added.