The revocation of the licence of defunct uniBank could affect the savings of over 370,000 individuals and their families, a report by KPMG has said.
According to the report, uniBank’s financial position, prior to its fusion with four other struggling banks: Sovereign Bank, The Beige Bank, The Royal Bank and The Construction Bank, presented significant systemic risks to Ghana’s financial sector’s stability, given the contagion effect it presented.
Before the central bank merged uniBank with the four others to birth the Consolidated Bank Ghana Limited, Dr Kwabena Duffuor’s bank’s licence was revoked and the bank put under KPMG’s administration.
The KPMG report, which revealed how the uniBank board ignored corporate governance rules, stated that not only will the activities of the bank affect individuals, but also key institutions such as hospitals, universities and other institutions partly owned by government.
In addition, some State Owned Enterprises (SOEs) are said to be exposed to the bank while the bank is said to owe pension funds and non-bank financial institutions to the tune of GHS850 million.
It further warned of a total deposit of GHS4.1 billion of which GHS3.5 billion expected to mature in the next 90 days, require significant short-term funding guarantee.
It stated that uniBank also owes $71.8 million to six international institutions. The report warned that not paying these balances could significantly erode investor confidence in Ghana.
It also added that Ghana’s credit risk ratings could be impacted, placing further pressure on the financial sector and the wider economy.
The document also pointed out that the company was over-staffed compared to others in the banking sector, causing a drain on its financials.
The KPMG document report, said uniBank, prior to the revocation of its licence, had 811 permanent staff, 64 contract staff , 990 outsourced staff and 79 National Service Staff for a bank with just 54 branches.
It also had related entities whose staff depended on it for financial support.
In the breakdown, the permanent staff of the related entities were 1,284, contract staff of 244, outsourced staff of 200 and 20 National Service personnel.
In total, the employees that depended on the financials of the bank were 3,692, even though the bank’s output was less, compared to the total staff strength.
It is anticipated that most of these employees have been affected by the revocation of the licence of the bank, as they no longer work for the bank.
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It has also emerged that the board did not follow any of the key good corporate governance rules outlined by the regulator.
Even when the central bank had cautioned the board of uniBank not to advance loans, it went ahead and granted loans to parties related to the company under circumstances that hurt its financial base.
“The Bank procured and paid approximately GHS57.6 million to related entities for goods and services from January 2017 to date, without an objective assessment for value for money after a BoG directive to cease giving loans in October,” the document stated.