The Bank of Ghana has disclosed that the revised asset position of UT Bank as at 14th August, 2017 when its license was revoked by the Bank of Ghana is approximately GH¢437.4 million.
The Bank of Ghana revealed this in a recent report on the Inventory of Assets and Liabilities of UT Bank Ghana Limited as at 14th August, 2017 but noted that it continues to review the Bank’s records to ascertain its accurate asset position.
BoG indicated that it has appointed Vish Ashiagbor and Eric Nana Nipah as Joint Receivers (JRs) for the purposes of winding down the affairs of UT Bank Ghana Limited.
“The assets and liabilities of UT Bank were approx. GHS1.3bn and GHS1.9bn respectively as at 14th August 2017. We conducted a preliminary asset quality assessment on takeover and made adjustments in line with available information. Our initial Asset Quality Review indicated that GHS869.6m of UT Bank’s total assets were impaired”.
Bank of Ghana
However, the Bank of Ghana indicated that from its initial assessment and Asset Quality Review it has adjusted the value of UT Bank’s Assets to GH¢437.4m. This value includes asset balances purchased by GCB per the P&A Agreement.
Rationale for the revision
Explaining the basis for the adjustments, the BoG noted that the physical cash counted (GH¢ 10.6m) on day 1 was lower than the amounts stated in the General Ledger.
On Day 1, BoG disclosed that it has performed a physical count of cash held in vaults at the Bank’s head office and branch network (28 branches). Cash counts were done in conjunction with GCB and BoG representatives, BoG explained.
“Total cash counted was the cedi equivalent of GHS10.6m (approx. GHS85k lower than the GHS10.7m stated in the Management Account and General Ledger (“GL”). GCB assumed all the cash in UT Bank in line with the Purchase and Assumption arrangement. The rates for conversion of all foreign currencies into Ghana Cedis were agreed with GCB. The cash was handed over on 14 August 2017 following a sign off of count sheets by GCB and BOG representatives”.
Bank of Ghana
Per the Management Accounts, Liquid Assets amounted to GH¢79.1m as at August 14, 2017. Liquid Assets of UT Bank comprises mainly of six (6) categories and the BoG provided a summary with their respective balances as at August 14, 2017 in the report.
The Management records of the Bank as at the revocation date showed that UT Bank maintained 14 foreign currency accounts (Nostro Accounts) with 9 correspondent Banks. The cedi equivalent of balances in these accounts was approximately GH¢33.9m as at 14th August, 2017, the report further reveals.
UT Bank Accounts
The JRs informed all correspondent banks of the receivership and requested for a confirmation of account balances. Further, they were instructed not to honour any payment instruction without prior authorization from the JRs, the BoG stated.
According to the report, UT Bank maintained Ghana Cedi, US Dollar, British Pound and Euros accounts with BoG. The net balance on all four accounts maintained with BoG was overdrawn by approximately GH¢69.7m as at 14th August 2017.
This was driven by the UT Bank’s Ghana Cedi account held with BoG. This overdraft amount has been excluded from the assets and added to BoG’s Liquidity Support advanced to UT Bank reported as part of the Bank’s liabilities.
“Our initial checks however, reveal that UT’s placement with Beige Capital Limited was used to secure a facility Beige Capital Limited advanced to Holman Brothers. A Quality of Asset review of the loan book using industry classification standards/guidelines suggests that only GHS231m of net Loans and Advances is recoverable”.
Bank of Ghana
Long Term Investments
Per the Management Accounts as at 14th August 2017, UT Bank’s Long Term Investments relates to three equity investments, amounting to approximately GH¢620k. This related mainly to equity investments in GCB, CAL Bank and Benso Oil Palm Plantation. But BoG noted that these values are at cost and the current values are likely to be different from what is reflected in the Bank’s books. The Bank of Ghana assured that “we will ascertain the current values of these investments and realize them appropriately”.
Other assets, including balances on prepaid expenses, money transfer balances, stock, intercompany receivables and others, amounted to approximately GH¢59.3m.
The report details the assets and liabilities of UT Bank Limited as at 14th August 2017 when its license was revoked by the Bank of Ghana. The Bank of Ghana underscored that the report was prepared using procedures that constitute an audit or assurance engagement in accordance with International Standards on Auditing (ISAs), and accordingly, no audit or assurance opinion has been expressed on the information contained in this report.
The document was prepared for Bank of Ghana in accordance with the Joint Receivers’ reporting responsibility to Bank of Ghana under Sections 130(1), 130(4) and 126(3) of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930), requiring the Receiver to prepare and deliver a report on the inventory of assets and liabilities of the resolved institution.
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