Capital Bank storms Court to retrieve over GHc100m from two financial institutions

Business News of Monday, 5 November 2018

Source: Myjoyonline.com

2018-11-05

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Defunct bank, Capital Bank, has gone to court to recover over GH?100 million being debts owed it by CDH Financial Holding and CDH Savings and Loans.

The bank, which was among the two banks that were taken over by state-owned GCB Bank over severe liquidity challenges, wants the High Court to order the Defendants to pay the full amount [ a total of GH?109, 390,634.70] plus the accrued interest.

The defunct bank also wants the Court to order the Bank of Ghana to withdraw the licenses of the Defendants (CDH Financial Holding and CDH Savings and Loans) for their inability to pay back investment on maturity dates.

Embattled

Meanwhile, Capital Bank and its shareholders have also been dragged to Court over the collapse of the bank last year.

The Plaintiffs Messrs Vish Ashiagbor and Eric Nana Nipah from Price water house Coopers say the bank’s collapse was a “direct result of defendants” “misgovernance” and “willful” breaches of banking regulations.

Challenges

The banking sector is only recovering from challenges that began with the collapse of Capital Bank and UT Bank in August 2017.

The two banks were subsequently absorbed by the state-owned GCB Bank.

Although the central bank assured that there would be minimal job losses, scores of the staff of Capital bank and UT bank were asked to go home and never return.

In 2018, the regulator took again took sweeping measures that shook the industry: it took over five more banks and created the Consolidated Bank Ghana to take over their assets and liabilities.

The Bank of Ghana has said indicators will soon point to stronger banks as a result of its sweeping reforms.

Speaking at the Joy Business Financial Services Forum on the theme ‘The Changing Tide of Ghana’s Financial Services Sector: The Cause, the Cost, and the Clean-up’, Deputy Governor of the BoG, Elsie Addo Awadzi, revealed Thursday that the regulator is still monitoring the sector to ensure that banks meet the minimum capitalization requirement by the end of the year.

Statement claim

Capital Bank makes the following six claims against CDH Financial Holding and CDH Savings and Loans:

A. An order directed against the defendants jointly and severally for the recovery of an amount of eighty-three million, four hundred and eighty-nine thousand, one hundred and twenty-three Ghana Cedis and twenty-nine (GHC 83,489,123.29) and five million and two hundred and eighty-nine thousand, three hundred and fifteen united states dollars and seven cents (US$ 5,289,315.07) being the outstanding amount agreed as owed to the Plaintiff by the Defendants [CDH Financial Holding and CDH Savings and Loans] on or about December 31, 2017.

B. Interest on GHc83.489,123. 29 calculated at the prevailing commercial bank lending rates from December 31, 2018, till the date of final payment.

C. Interest on US$ 5,289,315.07 calculated at the Bank of Ghana United States dollar lending rate from December 31, 2018, till the date of final payment.

D. Damages for breach of contract.

E. Costs.

F. An order directed at the Bank of Ghana to withdraw the licenses of the defendants for their inability to pay back investment on maturity dates.

G. Any other reliefs) as may seem fit to the honourable court.

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