Bank of Ghana revokes licences of 23 Savings and Loans Companies
-The Bank of Ghana has revoked the licences of 23 insolvent savings and loans companies and finance house companies in line with the Banks and Specialised Deposit-Taking Institutions Act, 2016.
The Bank of Ghana has also appointed Mr. Eric Nipah as a Receiver for the specified institutions in line with the Act.
In a statement, the Central Bank said the revocation of the licences of the 23 institutions had become necessary because they are insolvent even after a reasonable period within which the Bank of Ghana had engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency.
“It is the Bank of Ghana’s assessment that these institutions have no reasonable prospects of recovery, and that, their continued existence poses severe risks to the stability of the financial system and to the interests of their depositors,” it said.
The affected Savings and Loans companies are: Accent Financial Services Ltd, Adom Savings and Loans Ltd, AllTime Finance Ltd, Alpha Capital Savings and Loans Ltd. ASN Financial Services Ltd, CDH Savings and Loans Ltd, Commerz Savings and Loans Ltd, Crest Finance House Ltd, Dream Finance Company Ltd, and Express Savings and Loans Company Ltd.
Others are; First African Savings & Loans Company Ltd, First Allied Savings and Loans Co. Ltd, First Ghana Savings and Loans Co. Ltd, FirstTrust Savings and Loans Ltd, Global Access Savings and Loans Company Ltd, GN Savings and Loans Ltd, Ideal Finance Ltd, IFS Financial Services Ltd and Legacy Capital Savings and Loans Ltd.
The rest are; Midland Savings and Loans Company Ltd, Sterling Financial Services Ltd, Unicredit Savings and Loans Ltd and Women’s World Banking Savings and Loans Co. Ltd.
The statement said in line with the Government’s commitment to protect depositors’ funds, the Government had made funds available to enable the Receiver to pay depositors after their claims are validated.
It said the Receiver would in due course make an announcement with regard to when and where payments would be made.
The Receiver will also indicate documents required from depositors to facilitate the validation of claims and orderly payment of validated deposits.
Other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realise value from the remaining assets of these institutions.
The Bank of Ghana had also with effect from today, revoked the licences of two nonbank financial institutions, namely Express Funds International Ltd (remittance company) and Ghana Leasing Company Ltd (leasing company) which are insolvent and have been inactive for a number of years.
As part of its efforts to restore confidence in the banking and specialized deposit-taking sectors, the Bank of Ghana embarked on a clean-up exercise in August 2017, to resolve insolvent financial institutions whose continued existence posed risks to the interest of depositors.
A comprehensive assessment of the savings and loans and finance house sub-sectors carried out by the Bank of Ghana in the last few years, identified serious challenges, including low levels of capital, excessive risk-taking without the required risk management function to manage risk exposures and the use of depositors’ funds to finance personal or related-party projects or businesses.
“Given the risks that these institutions continue to pose to the entire financial system and the need to protect the interest of depositors, the Bank of Ghana is sanitizing this subsector through the orderly resolution of the failed institutions in accordance with Sections 123 to 137 of Act 930,” the statement said.
The Bank of Ghana had so far completed the clean-up of the banking, specialized deposit-taking (SDI), and non-bank financial institutions (NBFI) sectors which began in August 2017.
It had revoked the licences of nine universal banks, 347 microfinance companies, 39 microcredit companies/money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.
To ensure that the remaining institutions remain resilient going forward, the Bank of Ghana will remain vigilant, intensify on-site examinations and enforcement actions including the application of sanctions for non-compliance with statutory, prudential and other requirements, and ensure that early warning signs of distress are mitigated by regulated institutions expeditiously.
The Bank of Ghana will also work with ARB Apex Bank to reposition the rural and community banking sector, to enable them to better support rural economic development.
Furthermore, the Bank of Ghana and the Government of Ghana will also launch the commencement of operations of the Ghana Deposit Protection Scheme in September 2019 to further strengthen protection of depositors’ interests.