Ghana shuts two banks to protect financial stability

8/14/2017 10:40:02 PM

UT Bank and Capital Bank's operations taken over by GCB Bank 

Ghana's central bank has revoked the licenses of two banks and transferred their deposits and selected assets to state-owned GCB Bank in order to protect financial stability.

Depositors at UT Bank and Capital Bank needed to be protected due to the "severe impairment" of their capital, the central bank said on Monday following the moves.

"UT Bank and Capital Bank were heavily deficient in capital and liquidity and their continuous operation could have jeopardised not only their depositor’s funds, but also posed a threat to the stability of the financial system," Bank of Ghana governor Ernest Addison told reporters in Accra.

The regulator will punish directors and managers if they are found to have contributed to the impairment of the two banks, Addison said.

The supervisor of banks at the central bank Raymond Amanfu told Reuters the two banks were grappling with non-performing loans of 60-70 percent, adding that "their liabilities exceeded their assets, putting them in a position not to be able to meet their obligations".

The liquidation formed part of actions agreed with the International Monetary Fund ahead of the next review of Ghana's three-year aid programme, at the end of August.

Amanfu said deposits at the two banks were safe and depositors will now become customers of GCB Bank but will continue banking at UT Bank and Capital Bank branches.

GCB Bank is the second largest bank by assets out of 33 banks operating in Ghana, including UT and Capital.

The Ghana Stock Exchange said it has suspended UT Bank

Source: Reuters

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