UniBank tops loans default among collapsed banks

Adnan Adams Mohammed

UniBank, one of five banks merged into the Consolidated Bank Ghana limited, is reported to have the highest number of defaulting customers in loans and advances.

The bank has a total of  26,558 customers defaulting out of the 31,000 customers for all the seven collapsed banks. The total debt of Unibank stands at GH¢4.6 billion out of the over GH¢10 billion debt for all the banks in loans and advances.

According to a special audit report, most of the loans and advances which did not pass through the books amounts to GH¢3.8 billion and making it difficult for recovery.

"Poor records and non-existent data has become a major challenge to the receivers of the nine collapsed banks to recover debts owed to people and institutions", Dr Ernest Yedu Addison, the Governor of the Bank of Ghana said when addressing issues on the Banking Sector reforms at the fourth CEO Summit in Accra, last week.

He noted that out of the total loan debt of GH¢ 10.1 billion owed to people and institutions by these banks prior to the revocation of their licenses, only GH¢ 731 million have been recovered through loan repayment by customers, placement, liquidation of bonds and income and other income sources, leaving a balance of about GH¢ 9.3 billion yet to be recovered.

However, the new managers have already tried to recoup over GH¢5.5 billion debt from the collapsed bank’s shareholders with a plan to assume control of some of their hugely valued assets, with some of them standing trials.

The Bank of Ghana has already made it known that shareholders of uniBank used monies from the bank to acquire estate properties in their own names.

Among the other collapsed banks, Sovereign Bank had 298 customers owing some GH¢136 million. With The Royal Bank having 752 customers who are in debt of about GH¢1.42 billion whilst Beige Bank has 3,371 customers needing to refund GH¢872 million.

In attempt to pursue the debts owed by the collapsed banks, about fifty (50) directors and shareholders of the seven collapsed banks are expected to face trial over their alleged culpability in the eventualities.

Dockets have been referred to the Attorney General’s office after the conclusion of the work of a special team set up to investigate financial crimes in the country.

The collapsed banks are uniBank, UT Bank, Capital Bank, Royal Bank, Construction Bank, the Beige Bank and Heritage Bank.

The central bank noted that the affected banks operated with severe capital constraints as it revoked their licences.

The crisis saw the deposits of some 1.5 million Ghanaians affected though the government stepped in to safeguard their monies.

Protecting the depositors has so far cost the state GH¢9.9 billion, according to the Finance Minister, Ken Ofori-Atta.

Dr Addison explained that, investigations so far had shown that some assets were not registered in the names of the financial institutions, but in the names of connected parties, making it difficult to dispose the underlined collaterals to offset their outstanding loans.

The Governor underscored the critical role of the judiciary in ensuring efficient adjudication in commercial cases, but said the country would not be able to address some of the problems associated with the poor structural regime concerning Non-Performing Loans, if the courts failed to adjudicate some of these cases with speed.

He recommended the possibility of setting up special courts to adjudicate matters relating to the specific issues arising out of the banks resolutions and revocation of licenses, as well as issues relating to collateral.

"A swift and fair judicial system would enhance the efforts being made by the Central Bank to bring some sanity into the banking sector, by fighting against financial crime including money-laundering", Dr Addison expressed deep concern.