EOCO grills failed banks’ directors

The Bank of Ghana (BoG) has stated that dossiers on the seven failed banks have been handed over to the Economic and Organized Crime Office (EOCO) for investigations and possible prosecution of directors and other officials of the defunct indigenous banks.

Second Deputy Governor of the BoG, Elsie Addo Awadzi, made this known on Thursday in Accra at the Joy FM Financial Sector Forum, which was under the theme: “The Changing Tide of Ghana’s Financial Services Sector: The Cause, the Cost and the Clean-up.”

Touching on how the cost of the clean-up exercise of the banking sector would be recovered, Madam Addo Awadzi disclosed that “dossiers on all seven banks have been handed over to EOCO for investigation and possible prosecutions by relevant state agencies.”

The defunct banks are uniBank, Capital Bank, UT Bank, Construction Bank, Royal Bank, Sovereign Bank and Beige Bank.

The former Chief Executive Officer (CEO), of Beige Bank, Mike Nyinaku, reportedly cried bitterly on July 26, 2018 which was his 41st birthday after he was informed by BoG that his bank would be merged with four other banks.

According to reports, the former workers of Beige Bank were surprised about his mood on his birthday since he has been lively on those days over the years.

The licences of the banks were revoked by the Central Bank due to their insolvency.

Beige Bank, Royal Bank, uniBank, Construction Bank and Sovereign Bank were merged into the Consolidated Bank in August 2018 exactly a year after Capital Bank and UT Bank were taken over by the Ghana Commercial Bank (GCB) on the instructions of BoG.

Directors of uniBank have since filed a law suit, challenging BoG’s decision to revoke its licence,

Madam Addo Awadzi said EOCO has finally taken over investigations into alleged crimes that took place in those defunct banks, notably insider trading by some of the directors and officials of the said banks.

Internal Probe

According to her, “BoG’s own internal investigations into the conduct of Bank of Ghana officials have begun with the establishment of the Office of Ethics and Internal Investigations.

“Current and former officials of the Central Bank, who might be found culpable, will neither be spared nor shielded by management,” she added.

GH¢400m Recovered!

The Deputy Governor argued that “it’s important that the costs of these interventions which were borne by taxpayers are recovered possibly through recoveries from debtors, shareholders, and relevant and connected parties who took money from the defunct banks.

She added that the Receivers are making strides in their recovery efforts, adding that “Over GH¢400 million has so far been recovered by the Receivers of two banks closed last year.

‘Necessary Punishment’

“The BoG’s recent actions were necessary to ensure that banks that failed were made to exit the market in an orderly fashion and without disruptions to our financial system.”

“Failed banks become serious sources of risk for the entire financial system and the economy as a whole, and must be made to exit before they collapse the whole system. The defunct banks had reached a point where they were no longer able to operate as banks.”

Protection of funds

She reiterated that in taking the punitive actions against the failed banks, BoG sought to protect the deposits (about GH¢11 billion) held by these defunct banks, ensure that these defunct banks exited the market in an orderly fashion without creating disruptions to the rest of the system and allow stronger institutions to operate and support the economy.”

Sector Remains Strong

The Deputy Governor also stated that despite the collapse of the seven banks, “the banking sector is generally strong and continues to be profitable, judging from a number of key indicators.”

For instance, she said, “Total assets continue to increase, profitability remains high, industry Capital Adequacy Ratio (CAR) of 19% compared to required minimum of 10% and the quality of bank loans continues to improve, with a reduction in Non-Performing Loans (NPLs).

She indicated that “BoG is committed to ensuring that banks and other financial institutions it regulates, remain safe and sound and engage in practices that protect the deposits of their clients, as well as ensure that the financial system is safe and stable for all users.”