BoG's ‘slow poison’ will destroy uniBank – Adongo

Member of Parliament for Bolgatanga Central, Isaac Adongo, has condemned the Bank of Ghana (BoG) over what he said are deliberate attempts to administer “slow poison” to collapse uniBank.

His comment comes on the back of Bank of Ghana’s takeover of the management of uniBank.

The central bank in a statement said uniBank refused to cooperate with it in the performance of its supervisory responsibilities, including deliberately concealing some liabilities from its balance sheet, and failing to submit documents and records for supervisory inspection, hence the takeover.

The bank, among other things, also “failed to comply with a directive of the Bank of Ghana dated 26th October, 2017 under section 105 of Act 930, prohibiting the bank from granting new loans and incurring new capital expenditures. Failed to comply with several other regulatory requirements, including: Lending to a number of borrowers in excess of its regulatory lending limit (single obligor limit) under section 62 of the Banks and SDIs Act, 2016 (Act 930).”

Governor of the Bank of Ghana, Dr Ernest Addison, announcing the takeover at a press conference in Accra on Tuesday, 20 March 2018, assured depositors that their money is safe, stressing: "We’re not liquidating the bank, we are saving it."

However, Mr Adongo holds a contrary opinion as he insists that: “The action taken by the Bank of Ghana is actually akin to administering slow poison to uniBank with the eventual aim of killing the bank”.

He explained to Class News that the move by the central bank will lead to panic withdrawals and for the next few months there will not be issuance of loans.

This, he said, implies that the bank is also not expected to generate deposits because “no matter the assurances you give them (customers), they will act in the best interest of themselves”.

In view of that, he pointed out that there will be no revenue “so how are you going to turn the bank around in six months?”

“Clearly, what you have done is to press the panic button which makes the bank unattractive, so over the next six months the bank will now be worth less than it is worth today and at that point even if you are now going to sell the bank, you will sell a much weaker bank, a bank with a weaker value and you would have degraded the interest of shareholders in the bank. So whereas they (BoG) claim their aim is to protect the interest of the bank and turn the bank around they have actually taken a decision to put the bank into administration leading to receivership and liquidation.

“So that is slow poison to the bank which will kill the bank in six months,” he emphasised.

The MP proposed that what the BoG should have done was to appoint a consultant which could have been KPMG to work with the shareholders of uniBank and conduct a valuation to determine the current value of the bank.

Based on that, he said the BoG can assess the assets and liabilities and “pump in additional cash” if there were liquidity challenges.

He continued: “if the shareholders are able to raise some of the cash, BoG can put the balance in as shareholders of the bank together with existing shareholders. Based on that they can work together to establish a professional Board of Directors appointed by Bank of Ghana and existing shareholders. In fact, rebrand and grow the bank together over a period of two, three years and when the bank is on its feet and it is viable you value the bank again and determine the interest of Bank of Ghana so that shareholders can pay Bank of Ghana off and they leave the bank in now very safe hands and very strong and ready to continue its normal business but you don’t administer slow poison to the bank”.

He urged the Bank of Ghana to immediately stop their actions targeted at destroying indigenous Ghanaian banks as it is not in the best interest of the country.

Meanwhile, the recently-deposed management of uniBank intends going for arbitration over the indigenous bank’s takeover by the central bank, its legal adviser Dr Dominic Ayine has told Reuters.

“We intend to go for arbitration,” Reuters quoted Dr Ayine as saying.