Gifty Afenyi-Dadzie owned First African Savings & Loans Limited
FIRST AFRICAN Savings & Loans Limited was found to be experiencing liquidity and capital adequacy challenges since 2017.
The company, which belonged to the First African Group Limited, recorded net worth of negative GH¢22.29 million as of end May 2019 impairing its paid-up capital and in the process violating Section 28(1) Act 930.
Again, its capital adequacy ratio of negative 90.15% as of end May 2019 violated Section 29(2) of Act 930.
A BoG report which made these known said the company failed to conduct due diligence on its counterparties, resulting in the impairment of some of its investments.
“The company’s affiliate, First African Remittances, UK failed to reimburse funds totalling GH¢5.40 million due to First African Savings and Loans. First African Savings and Loans pre-financed remittance receivables and the said amount has been outstanding for over two years. The long outstanding remittance receivable has been provisioned as a loss.”
The BoG report which revealed these said First African Savings & Loans’ non-performing Loans ratio had been deteriorating since 2017 to virtually 100% non-performing as of end May 2019.
Also, the company consistently violated the minimum cash reserve ratio requirement, which was the regulatory measure of the liquidity position of deposit while also it was unable to meet the withdrawal demands of its depositors.
“The institution has related party exposure which it is unable to recover.”
The BoG said since October 2018, it engaged the board and senior management on the need to inject additional capital but was unsuccessful.
First African Savings & Loans Company Limited was incorporated in November 1993 to undertake money transfer and remittance business. It was licensed by Bank of Ghana to operate as a savings and loans company in October 2009.
Crest Finance House Limited
Commenting on Crest Finance House Limited, the BoG report said the company was found to have recorded non-performing exposures to its parent company and a company in which the Chief Executive Officer was a director in excess of statutory limit.
In 2015, BoG found the institution to be insolvent with serious liquidity challenges. The institution’s capital adequacy ratio and net worth as of October 2015 were severely negative.
The exposures, according to the central bank, also contributed significantly to Crest Finance House’s liquidity challenges.
“The institution’s total loan portfolio was non-performing due to poor loan underwriting standards and related party exposures. The institution was unable to honour its customers’ withdrawal request.”
“Weaknesses in corporate governance practices and poor risk management culture contributed to the institution’s problems. The institution has ceased operations and closed its offices to the general public without approval from the Bank of Ghana.”
Additionally, the institution’s net worth of negative GH¢17.55 million as of end May 2019 indicates that its paid-up capital is impaired in violation of Section 28(1) Act 930.
Dream Finance Limited’s capital adequacy ratio of negative 6,873.50% as of end May 2019 violated Section 29(2) of Act 930.
Originally incorporated as Apex Finance House Limited on September 2, 1997, its name was changed to Crest Finance House Limited and subsequently licensed to operate as a Finance House on 5th June, 2007.
BY Samuel Boadi