Business News of Sunday, 11 March 2018
Source: citifmonline.com
2018-03-11
Capital Bank and UT Bank were absorbed by the GCB Bank last year
Government’s decision to absorb the liabilities of UT and Capital banks could weaken the financial industry if not managed properly.
This is the warning from Economist, Dr. Ebo Turkson.
According to him, the assurance of absorption of debts after a possible collapse could make private banks less competitive in giving value for money for customers.
The government is hoping to issue a 2 billion cedi bond to settle the total liabilities of UT and Capital banks estimated at 1.6 billion cedis.
It also follows their absorption by GCB Bank in a purchase and assumption agreement, last year.
But Dr. Ebo Turkson tells Citi Business News the government must be guided with the decision.
“This doesn’t send any positive signal to private banks; that when things are not managed properly and there is a takeover, to maintain the credibility of the financial system, they will get the government coming in to pay up for their mess,” he argued.
The announcement of issuing a bond to clear the debts has been met with mixed reactions.
The Minority in Parliament, for instance, has lamented the possible impact of the move on the taxpayer as it will add unto the debt burden.
Dr. Ebo Turkson admits to the need to protect GCB Bank from any financial shock but wants government to pursue any traceable assets of the two collapsed banks while holding the shareholders accountable for any harm to the financial sector.
“GCB is largely a public bank and probably one of the largest banks and so it is good we help capitalize the bank and not lead it into problems because it had to absorb UT and Capital banks. But I think that even if we are going to pay for that, the government should try as much as possible to hold the shareholders of those two banks liable so that if they have any asset that we could go and take hold of, we should do that,” he observed.
PwC accepts bids for sale of UT, Capital banks’ assets
Meanwhile the Joint Receivers of the transaction, PricewaterhouseCoopers (PwC), has advertised the invitation of bids for the sale of assets of UT and Capital banks.
The assets include; land and buildings, motor vehicles as well as chattel assets such as furniture, fittings, computers and other office equipment.
The deadline for the submission of bids is Monday, 19th March, 2018.