The case of UT Bank and Capital Bank; What went wrong?

100, all but a clear indication that those two banks were here to stay. Little did we know that the awards and credentials meant little to the survival of these banks.

Despite the assurance of BoG of financial stability as a result of its prompt intervention to protect the interest of depositors as expressed, “ The Bank of Ghana assures the public that all customers can continue normal banking business at all UT Bank and Capital Bank facilities which are now branches of GCB bank... The approval by the Bank of Ghana of this transaction is to strengthen Ghana’s banking sector, ensure financial stability and protect depositors’ funds”, the BoG failed to assure the banking community of no such future collapse of another bank in the manner we have witnessed.

It has been pointed out by some analysts that the banks saw this coming but the unwillingness of the Ghanaian business moguls to enter into merger, poor corporate governance exhibited by lack of competence by board members, lack of managerial due diligence before granting loans, all but culminated in the balance sheet of the banks that created the situation, as described by the BoG for the approval of the transaction,“excessive liabilities of the bank”.

This article is, therefore, demanding answers beyond the surface tension explanation given by the BoG. Scholars of banking and finance and astute leaders in the industry should investigate this banking nightmare to unravel the underpinnings of this unbelievable situation to serve the objective of preventing a similar situation in the future and to offer current students of banking and finance the opportunity to better appreciate this development.

The writers are students of University of Ghana pursuing MSc in Development Finance

Cedric Dzelu, cedricdzelu@gmail.com

Albertha A Adongo, albertha.adongo@yahoo.co.uk