Takeover of UT, Capital Banks by GCB Bank
News about the takeover of UT Bank and Capital Bank by GCB Bank has sent shock waves down the spines of many stakeholders in the banking sector.
The Bank of Ghana on Monday issued a statement revoking the licenses of UT Bank and Capital Bank and entered into a Purchase and Assumption transaction with GCB Bank.
The PricewaterhouseCoopers was appointed a receiver to manage the assets that were not taken over by the GCB Bank and work with customers to recover those assets.
Customers who have deposits in the two banks are living in fear and uncertainty since they do not know what is likely to happen to their deposits.
It is gratifying to note, however, that the Bank of Ghana has assured the public that all such deposits are safe and that all depositors will have access to their funds.
Another worrying issue regarding the collapse of the two banks is what happens to the about one thousand staff of UT Bank and Capital Bank.
Here, the management of GCB Bank has made it clear that they will need to critically examine the skills of the staff to be able to determine which of them qualify to be re-engaged or absorbed.
The profit motive of GCB Bank as a business entity cannot be swept under the carpet, its management will have to reorganise things better in order to re-engage the staff of the two banks and utilise their talents for the maximisation of their operations.
The nation expects the GCB Bank not just to be happy with the takeover, but to see to it that it performs well to contribute its quota to the economic growth of the country.
A number of factors tend to influence positively or negatively on the performance of banks everywhere.
Banks thrive on credits through the offer of loans to their customers.
However, in granting the loans, there is the need to pay critical attention to risks.
Assessment of risks of borrowers is necessary to protect the assets of banks. If attention is not paid to risk management, a bank may perform below expectation.
When there are miscalculations regarding risk management, it is possible for a bank to experience huge losses, a situation that may lead to its collapse.
Distressed banks may be the result of the inability to re-finance their debts or repay them on a timely basis.
All these influence the level of performance of financial institutions, so it is important for the management of such institutions to take appropriate corrective measures to prevent the collapse of their institutions.
Also, banks perform better when the economy thrives well. If the general market conditions are unfavourable, they can have a negative influence on investors to lose faith in them.
For example, high interest rate can adversely affect their performance. It is very regrettable that the UT Bank as well as the Capital Bank should end up this way, raising fears among existing and potential banking customers.
The unfortunate development must serve as a learning curve for all financial institutions across the country. For as the saying goes if your neighbors beard is on fire, the wisest thing to do is to get water on a stand-by.
As a nation, we need to put the economy on track and also ensure rigid regulatory measures from the Bank of Ghana so as to avoid a recurrence of such situations.
The Bank of Ghana has done very well in taking the right steps to withdraw the licenses of the two distressed banks. We must applaud the Central Bank for the manner in which the issue has been handled so far.
Going forward, any other bank in distress must be carefully monitored to assess their risk levels so that appropriate steps can be taken at the right time to protect the interest of their customers.
If the economy is put on a sound footing as is being done now and appropriate regulatory measures taken by the Bank of Ghana, there will be expansion and continuous growth in the banking sector to promote business growth and create jobs.
BY KOFI AMPONSAH-BEDIAKO, HEAD OF PUBLIC RELATIONS, GHANA STANDARDS AUTHORITY.
The Bank of Ghana on Monday issued a statement revoking the licenses of UT Bank and Capital Bank and entered into a Purchase and Assumption transaction with GCB Bank.
The PricewaterhouseCoopers was appointed a receiver to manage the assets that were not taken over by the GCB Bank and work with customers to recover those assets.
Customers who have deposits in the two banks are living in fear and uncertainty since they do not know what is likely to happen to their deposits.
It is gratifying to note, however, that the Bank of Ghana has assured the public that all such deposits are safe and that all depositors will have access to their funds.
Another worrying issue regarding the collapse of the two banks is what happens to the about one thousand staff of UT Bank and Capital Bank.
Here, the management of GCB Bank has made it clear that they will need to critically examine the skills of the staff to be able to determine which of them qualify to be re-engaged or absorbed.
The profit motive of GCB Bank as a business entity cannot be swept under the carpet, its management will have to reorganise things better in order to re-engage the staff of the two banks and utilise their talents for the maximisation of their operations.
The nation expects the GCB Bank not just to be happy with the takeover, but to see to it that it performs well to contribute its quota to the economic growth of the country.
A number of factors tend to influence positively or negatively on the performance of banks everywhere.
Banks thrive on credits through the offer of loans to their customers.
However, in granting the loans, there is the need to pay critical attention to risks.
Assessment of risks of borrowers is necessary to protect the assets of banks. If attention is not paid to risk management, a bank may perform below expectation.
When there are miscalculations regarding risk management, it is possible for a bank to experience huge losses, a situation that may lead to its collapse.
Distressed banks may be the result of the inability to re-finance their debts or repay them on a timely basis.
All these influence the level of performance of financial institutions, so it is important for the management of such institutions to take appropriate corrective measures to prevent the collapse of their institutions.
Also, banks perform better when the economy thrives well. If the general market conditions are unfavourable, they can have a negative influence on investors to lose faith in them.
For example, high interest rate can adversely affect their performance. It is very regrettable that the UT Bank as well as the Capital Bank should end up this way, raising fears among existing and potential banking customers.
The unfortunate development must serve as a learning curve for all financial institutions across the country. For as the saying goes if your neighbors beard is on fire, the wisest thing to do is to get water on a stand-by.
As a nation, we need to put the economy on track and also ensure rigid regulatory measures from the Bank of Ghana so as to avoid a recurrence of such situations.
The Bank of Ghana has done very well in taking the right steps to withdraw the licenses of the two distressed banks. We must applaud the Central Bank for the manner in which the issue has been handled so far.
Going forward, any other bank in distress must be carefully monitored to assess their risk levels so that appropriate steps can be taken at the right time to protect the interest of their customers.
If the economy is put on a sound footing as is being done now and appropriate regulatory measures taken by the Bank of Ghana, there will be expansion and continuous growth in the banking sector to promote business growth and create jobs.
BY KOFI AMPONSAH-BEDIAKO, HEAD OF PUBLIC RELATIONS, GHANA STANDARDS AUTHORITY.
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