The Governor of the Bank of Ghana (BoG) has disclosed the reasons for the solvency of the five banks which have been taken over.  

Dr Ernest Addison revealed at a press conference Wednesday that three of the five banks obtained their banking licenses by false pretenses.

Beige Bank, Construction and Sovereign Bank’s licences “was obtained by false pretences through the use of suspicious and non-existent capital,” he said.

Below is the reason behind Sovereign Bank's closure:

“in the case of Royal Bank, an on-site examination conducted by the Bank of Ghana on 31st March, 2018 revealed a number of irregularities. Its non-performing loans constitute 78.8 percent of total loans granted, owing to poor credit risk and liquidity risk management controls.

“A number of the bank’s transactions totaling GH¢161.92 million were entered into with shareholders, related and connected parties, structured to circumvent single obligor limits, conceal related party exposure limits, and overstate the capital position of the bank for the purpose of complying with the capital adequacy requirement," he said. 

Watch the video below: