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The case of UT Bank and Capital Bank; WHAT WENT WRONG? 

It may have come as a shock to many Ghanaians but analysts say it has long been coming and the Press Statement from the Bank of Ghana on the 14th of August 2017 put an end to all speculations and would have fetched fortunes to anyone who would have gambled on the folding up of the once prestigious UT Bank and Capital Bank both wholly Ghanaian Owned Banks.

The Statement read in part, “The Bank of Ghana has approved a Purchase and Assumption transaction with GCB Bank Ltd that transfers all deposits and selected assets of UT Bank Ltd and Capital Bank Ltd to GCB Bank Ltd. The Bank of Ghana has revoked the Licences of UT Bank Ltd and Capital Bank Ltd’’, the statement continues, ‘’This action has become necessary due to severe impairment of their capital………………The main offices and branches of UT Bank and Capital Bank will be under the control of GCB Bank”.

To a lay man’s understanding GT Bank and Capital Bank the once vaunted wholly Ghanaian Banks have collapsed and there is no shyness in saying that after the announcement of the Bank of Ghana in effect the revocation of their licences.

Certainly this does not come as a good news for the banking sector especially considering that these Banks have largely been seen as seeds of entrepreneurial progress and the anchor of many businesses in Ghana and at the heart of this unfortunate announcement is the question in capital and bold letters WHAT WENT WRONG?

Before the break of dawn of the 14th of August 2017, UT Bank was the Bank liberating both businesses and workers from economic wilderness granting a loan in a record time of 48 hours, a strategy that made it to win many awards and accrue to itself enviable prestige in the banking industry such as Bank of the Year 2011, Best Bank IT/Electronic Banking at the Ghana Banking Awards in 2011, adjudged the most Respected Company by Price Water House Coopers and B&FT newspaper in 2012.

Capital Bank certainly had its own place of pride, in 2016, Capital Bank was adjudged the Best Growing Bank, Best Bank in Deposits & Savings at the Ghana Banking Awards and ranked 8th on the list of Ghana club 100, all but a clear indication that these two banks are here to stay, little did we know that the abortion of these awards and credentials mean little to the survival of these banks.

Despite the assurance of BoG of financial stability as a result of its prompt intervention to protect the interest of depositors as expressed, ‘’ The Bank of Ghana assures the public that all customers can continue normal banking business at all UT Bank and Capital Bank facilities which are now branches of GCB bank……………… The approval by the Bank of Ghana of this transaction is to strengthen Ghana’s banking sector, ensure financial stability and protect depositors’ funds’’, yet what the Bank of Ghana failed to do is to assure the banking community of no such future collapse of another Bank in the manner we have shockingly been introduced to.

It has been pointed out by some analysts that the banks saw this coming but the unwillingness of the Ghanaian business moguls to enter into merger, poor corporate governance exhibited by lack of competence by board members, lack of managerial due diligence before granting loans all but culminated to affect the balance sheet of banks to create the situation as described by the Bank of Ghana for the approval of the transaction “excessive liabilities of the bank”.

This article is therefore inspired by the question of WHAT WENT WRONG, demanding for answers beyond the surface tension explanation given by the Bank of Ghana to call on scholars of Banking and Finance and astute leaders in the industry to make a scholarly investigation into this banking nightmare to unravel the underpinnings of this unbelievable situation to serve the objective of preventing a similar situation in future and to offer current students of banking and finance the opportunity to better appreciate this development.


Authors are students of University of Ghana pursuing MSc in Development Finance

Cedric Dzelu,

Albertha A Adongo

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