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Pending Legal Claims Against BoG Declined To GH¢94.47 Million In 2021

April 16, 2022
Stephen KotochiebyStephen Kotochie
in Banking
0
Pending Legal Claims Against BoG Rose To GH¢94.47 Million In 2021

Bank of Ghana’s contingent liabilities in respect of pending legal suits against the Bank Group saw a significant decline in the 2021 financial year.

According to Bank Ghana’s 2021 Audited Financial Statement, pending law suits against the Bank Group dropped from GH¢2.94 billion in 2020 to GH¢94.47 million in the 2021 financial year.

The Bank of Ghana (BoG) did not mention the individual cases involved but hinted that the contingent liabilities above relate to a number of outstanding cases and that, the disclosure of the individual cases in the financial statements is not “practicable”.

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“No provision in relation to these claims has been recognized in the consolidated financial statements as legal advice indicates that it is not probable that a significant liability will arise. The cases are mainly brought against the Bank in relation to the performance of its functions as a Central Bank, for contracts entered into by the Bank and dissatisfied employees alleging wrongful dismissal”.

Bank of Ghana

Aside pending legal suits, the Bank of Ghana disclosed that the Group entered into various irrevocable commitments and contingent liabilities.

Capital Expenditure Commitment

One of such irrevocable commitments entered by the Bank Group involved capital expenditure. The Bank of Ghana disclosed in the statement that it had capital expenditure commitments of GH¢245.35 million not provided for in the financial statements as at 31st December 2021. These commitments were almost 8 times higher than the GH¢¢31.19 million at the end of December 31, 2020.

According to the BoG, even though these obligations may not be recognized on the statement of financial position, they do contain some risks and were therefore, highlighted in the statement.  

Bank of Ghana stated that these capital expenditure commitments include capital expenditure contracts that have been awarded but have not yet been executed. The major projects ongoing include remodeling of some regional offices, development of the new Bank of Ghana Head Quarters project and development of a guest house project in Tamale.

Addison 4
Dr. Ernest Addison – Governor of the Bank of Ghana

Contingent liabilities in respect of letters of credits for the Group amounted to GH¢5.01 billion in 2021, down from GH¢937 billion in 2020. With regards to Guarantees and Performance Bonds, BoG disclosed that it entered into various commitments in the normal course of its business. The maximum exposure of the Group in respect of guarantees and performance bonds outstanding as at 31st December 2021 was GH¢3.40 billion, slightly higher than GH¢3.26 billion recorded at the end of the 2020 financial year.

Another aspect of the Bank’s irrevocable commitments was in the area of Securities and Pledges. The Bank of Ghana pledged GH¢6.65 billion as security for its short-term borrowings in the 2021 financial year.  The pledges in 2021 were however, 2 times lower than the GH¢15.46 billion pledged in the 2020 financial year.  BoG explained that “The pledge is against the value of foreign securities”.

Subsidiaries of the Bank of Ghana

The financial statement contained audited reports of the consolidated and separate financial statements of Bank of Ghana and its subsidiaries, together known as the Bank Group. The Bank of Ghana owns fifty-one per cent (51%) of the issued shares of Ghana International Bank Plc, a company incorporated in the United Kingdom, to carry on the business of commercial banking.

BoG also owns hundred per cent (100%) of the shares of Ghana Interbank Payment and Settlement Systems Limited, a company incorporated in Ghana which operates the national payments system. The Bank owns seventy per cent (70%) of the shares of Central Securities Depository (GH) Limited, a company incorporated in Ghana to carry out the business of immobilization and dematerialization of securities.

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The Bank owns hundred per cent (100%) of the shares of The Bank Hospital Limited, a company incorporated in Ghana to provide healthcare services. The Bank Hospital financial statements have not been consolidated because it is in transition and still in the process of developing appropriate structures to enable the Bank consolidate the accounts in 2022, BoG explained.

READ ALSO: GMA Cautions Public to Be Mindful During Easter Celebrations

Tags: Bank of GhanaCapital expenditureCOVID-19Ghana NewsLegal Claims

Send your news stories to [email protected] and via WhatsApp on +233543050759.

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