Firstrust Savings Was Seriously Distressed


FirsTrust Savings and Loans Limited

THE BANK of Ghana (BoG) has given reasons why it revoked the licence of FirsTrust Savings and Loans Limited (FTSL).

The Central Bank said its reviews conducted in 2015, 2016 and 2017 all showed that FTSL recorded net worth of negative GH¢175.90 million as of end May 2019 which indicated that its paid-up capital was impaired in violation of Section 28(1) Act 930.

Also, its records showed a capital adequacy ratio of negative 132.96% as of end May 2019 which violated Section 29(2) of Act 930.

The BoG said it engaged the board and senior management on the need to inject additional capital.

Cash challenge

“The institution has breached the statutory cash reserve ratio (CRR) requirement since January 2018. The institution is currently facing challenges in meeting customer withdrawals, with numerous customer complaints to the Bank of Ghana. Cash reserve requirement as of end May 2019 was 0.07%.”

It continued that the company used depositors’ funds to finance related party projects leading to its over exposure to six of its related companies to the tune of GH¢17.93 million.

The BoG report said the non-performing related party exposures of FTSL had contributed significantly to the liquidity challenges of the institution.

Other issues it revealed were that it had weaknesses in corporate governance practices as the institution was without a functioning board since August 2018.

Unsafe banking practice

“The institution has consistently failed to implement Bank of Ghana on-site examination recommendations including the payment of penalties imposed for breaching some sections of Act 930. Also, it failed to keep accounting records in a manner that gives an accurate and reliable account of its transactions. This constitutes unsafe and unsound banking practice.”

Merger denied

BoG declined a request dated 25th July 2019 to merge the operations of FirsTrust Savings and Loans Limited and Ideal Finance Limited because the two institutions under consideration are both insolvent and illiquid. The total projected cash injection of GH¢127.00 million, if approved, will lead to total shareholders’ funds of the proposed merged entity from negative GH¢291.60 million to negative GH¢164.60 million and CAR from negative 78.32% to negative 47.26% leaving a significant capital deficit of GH¢234.05 million. The merger was, therefore, not going to address the current financial challenges facing the two institutions, or improve their future prospects.


FirsTrust Savings and Loans Company Limited (FTSL) was authorised as a savings and loans by the Bank of Ghana on September 19, 2014 and was issued a license as FTSL on January 28, 2015. The name was changed to FirstTrust in January 2015.  Prior to this, the institution was known as EZI Savings and Loans (EZI) Limited which was licensed by the BoG as a savings and loans institution on October 11, 2007 until its acquisition by Ideal Financial Holdings in 2014.

BY Samuel Boadi


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