The Bank of Ghana (BoG) says it gave management of uniBank enough time to correct its wrongs but the situation got a point where the anchor could simply not hold no matter how hard it tried.
Speaking on Joy FM's Super Morning Show on Wednesday, the 2nd Deputy Governor, Elsie Awadzi disclosed that when the Central Bank noticed uniBank's struggles, its shareholders and directors were asked to come up with a plan of action to correct all the deficiencies that were identified.
“This did not start yesterday. We commissioned an Asset Quality Review in 2016 that identified weaknesses in their capital and asked them to come up with a plan.
“They did but the problem is that that plan failed to materialize and failed to correct the deficiency,” she explained.
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The Central Bank, she noted, nonetheless, continued to call regularly, give them notices and directives on what to do to improve the situation.
But some of those were flouted, she said, adding “we have not relented in our efforts to get them to correct these and we have given them as much time to do just that.”
However, when all efforts failed, the BoG had no choice but to step in for the sake of deposits, the public and the financial system, she disclosed.
She said Tuesday's announcement could not have been delayed because “if you don’t correct these problems soon enough it becomes a problem for the entire financial system and that is what we tried to avoid.
“And the idea was also that if we didn’t act at some point the bank would have collapsed and we wanted to stop that.”
The BoG’s final move, the Deputy Governor said, was to save the bank and keep it running to prevent job losses, ensure that depositors continue to do business with the bank and its customers continue to patronise it.
“We want to make sure this bank stays and continues to be an important part of the economy,” she stressed.
Mrs Awadzi also rubbished suggestions that the BoG is intentionally causing the collapse of local banks in the country by dragging its feet and waiting for things to get out of hand before stepping in.
According to her, this cannot be true because even while it regulates the banking sector, it is also taking steps to review its functions and processes to enable it better play its role in the best way possible.
uniBank has at least 31 branches across the country
She said the Central bank is committed to regulating and supervising the banks properly to enable them to stay afloat.
In view of this, it is “reviewing its supervisory functions, supervisory process, and its entire supervisory framework to ensure that it is as strong as it is required to be so that it is balanced, fair and that it takes steps to monitor banks more closely and all other institutions that it monitors and to get bank shareholders to address any problems that are identified sooner than later.”
The problem, however, Mrs Awadzi noted, is that, as the regulator, it would normally rather give shareholders and management of institutions a chance to correct problems they face before it steps in.
She said the normal practice is not to take over at the slightest occurrence of an issue, rather, “you want to give them ample opportunity and there is a fine balance as to how much time you give them.
“So it is important that we allow shareholders and management to correct their problems and then when it gets to a point where we feel that deposits are at risk because these problems are not being corrected as quickly as it ought to be or not enough steps are being taken to address the problem, we then step in,” she added.
Mrs Awadzi stressed that the BoG is not relenting in its efforts to regulate, strengthen and supervise the banking sector and to be able to do that, it is strengthening its own internal capacity.
She assured that that will continue to be done “with much excellence as required.”