I heard your comments on Bank of Ghana’s (BOG) decision to wind down some banks. You admitted some banks may have done things wrong, but specifically questioned whether Duffour (uniBank) and Nduom (GN Bank) did anything wrong, and if the government, if it wanted, could not have saved them?
This letter is to provide you a brief summary of the reasons for their closure, first uniBank.
Contrary to your view, uniBank was indeed saved. Only that new shareholders (ie government) now control the bank. Depositors and majority of workers were saved through the bridge bank, CBG.
Before its closure, uniBank had been extensively assisted by BoG. Before 2016, liquidity support of GHc850 million had been given. In 2017, when new BoG governors came in, a further GHc1.1 billion was extended to uniBank. In the first quarter of 2018, BoG further assisted uniBank with over GHc200 million.
Liquidity support is meant to be a temporary solution. For a bank to rely on liquidity support for 2 years raised questions. BoG then sort to examine uniBank’s books further. This revealed worrying trends. It was noted that uniBank’s shareholders had siphoned GHc3.7 billion from the bank. These withdrawals were hidden from BoG through misreporting of Loans and deposits from customers. Management, through direct coercion from a beneficial shareholder, reduced the deposit number, and increased the loan balance in order to hide the GHc3.7 billion.
In addition to the GHc3.7 billion above, they advanced loans of GHc2 billion to companies closely related to the shareholders, in clear breach of the banking laws at the risk of depositors’ funds. This brings the balance to GHc5.7 billion taken from uniBank by shareholders, which the Receiver is pursuing in court.
The shareholders admitted using uniBank’s money to acquire property registered in the name of HODA (House of Duffour Assets). They said the value of the assets was GHc4 billions and promised to transfer them to uniBank. A copy of their letter is enclosed for your perusal.
Till date, the shareholders have failed or refused to return the assets they took. As a result, government of Ghana (GoG) provided GHc4.5 billion of taxpayer’s money to pay depositors of uniBank. Bank of Ghana is yet to be paid its GHc2.2 billion liquidity support. Foreign lenders who advanced nearly US$70 million are yet to be settled. BoG and GoG have made available GHc27 million cash to pay uniBank workers. Other vendors and suppliers who provided goods and services to uniBank in the region of GHc15 million are yet to be settled.
All the above debts can only be settled when HODA returns the assets they themselves valued at GHc4 billion. Why are they keeping these assets while poor vendors, suppliers and lenders suffer?
If you were the BoG governor would you continue pouring water into this Basket? These matters are only a few of the many ills committed against uniBank by its shareholders.
Kindly digest the above. The issue of GN Savings and Loans (then GN Bank) will be discussed in another letter to be addressed to you.
Yours sincerely, A concerned citizen.
PS: You can confirm each of the facts with Duffour directly.