Dr Ernest Addison – Governor BoG
Sovereign Bank has joined the list of commercial banks in the country whose activities have come under the spotlight of the Bank of Ghana (BoG) in recent times.
Information from the Central Bank says an on-site examination by the regulator at Sovereign Bank revealed some governance and capitalization challenges which have necessitated urgent checks.
As a result of this, BoG says it has appointed an advisor to Sovereign Bank Limited since April this year.
“Given the recent press reports on the bank, however, we find it necessary to release this press statement to clarify the issues on Sovereign Bank. Sovereign Bank was licensed by the Bank of Ghana as a universal bank in January 2016. As part of its supervisory functions, the Bank of Ghana completed an on-site examination of the bank in December 2017.”
The Bank of Ghana added that it has a range of powers under the Banks and Specialized Deposit Taking Institutions Act of 2016 (Act 930) to take prompt remedial action to address supervisory concerns it identifies in a regulated institution.
And “one of such powers is to appoint an advisor under Section 101 (1) of Act 930 that will advise an institution’s management to advise the management of Sovereign Bank Limited.”
Role Of Advisor
The advisor, it claimed, is expected to help monitor the bank’s recapitalization efforts and implementation of governance reforms agreed with the Central Bank.
The advisor would stay in the bank until otherwise advised by the Bank of Ghana, and will furnish it (Bank of Ghana) with a status report on the bank as frequently as it may require.
It is important to note that an advisor, unlike an official administrator, does not take over the powers, responsibilities and duties of the bank’s shareholders, directors or management.
Under Act 930, the advisor may attend meetings of the Board of Directors without voting at such meetings.
Assurance To Customers
BoG has assured depositors and customers of Sovereign Bank Limited that it (Sovereign Bank) remains open for business under the control of the bank’s own management and that customers’ deposits are safe.
Recent Casualties
The Bank of Ghana has revoked the licences of the UT Bank Ltd. and Capital Bank Ltd under a Purchase and Assumption Transaction.
UT Bank and Capital Bank were deeply insolvent, which meant their liabilities exceeded their assets, putting them in a position not to be able to meet their obligations as and when they fell due.
Despite repeated agreements between the Bank of Ghana on one hand and UT Bank and Capital Bank on the other to implement an action plan to address these significant shortfalls, the owners and managers of UT and Capital Banks were unable to increase the capital of the banks to address the insolvency.
The Central Bank also in March this year took over management of a private bank – Unibank – due to challenges facing it.
The regulator mentioned weak supervisory standards and weak operations as the cause of the challenges.
Call for mergers
BoG has asked banks, which cannot mobilise the new capital requirement of GH¢400 million to merge as soon as possible to prevent their closure.
By Samuel Boadi