‘Reverse revocation of our license’ – Defunct FGSL staff to Bank of Ghana

Staff of defunct First Ghana Savings and Loans Limited (FGSL) are calling on the Bank of Ghana (BoG) to reverse the revocation of its license as early as practicable.

The group is asking the President, Nana Addo Dankwa Akufo-Addo to intervene in the matter to reverse the decision taken by the Central Bank.

The staff also want the National Investment Bank (NIB) to take its hands off FGSL to allow interested investors take over the operations of the company.

A statement released on Wednesday and signed by Convener, Robert Agbadza said the woes of the FGSL started when the state-controlled board failed to inject the needed capital into the operations of the organization.

He said, “Even before NIB acquired the majority shareholding in First Ghana Savings and Loans Ltd in 2014, the Board was controlled by the state through NIB, the Ministry of Finance and the Ministry of Water Resources Works and Housing. Even the capital injected by NIB in FGSL, the fund was directly invested at uniSecurities by NIB Management with the strictest instruction to the Management of First Ghana Savings and Loans not touch it.”

The Acting Managing Director, the staff says, was asked to proceed on leave when the decision taken by the board was questioned.

The group is also faulting the Central Bank for not taking any action even though the board was wrongfully constituted.

“The composition of the Board contravenes Section 58(1) (e) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (ACT 930) and paragraphs 28 and 36 of the Corporate Governance Directive 2018 of the Bank of Ghana. So, if Section 60(5) of the Banks and Specialised Deposit-Taking Institutions Act 2016 (ACT 930) was complied with why has the Bank of Ghana glossed over these infractions?”

The action of the BoG, according to the staff, could have been averted if the government, which is the largest shareholder through NIB had intervened.

The statement said, “Our information was that a minimum additional capital of GH¢20 million would have averted this action. However, the government, through NIB, has watched on for the BOG to revoke our licence. It is therefore preposterous for the majority shareholder (the state) of 98% who failed to discharge their responsibility of recapitalizing FGSL to turn around, using another agency of the state to accuse FGSL of insolvency and revoke its licence.

We find it absurd that NIB Ltd which had consistently frustrated strategic investors like Bank PHB, AfriBank and Ghana Home Loans, which expressed interest in FGSL since 2007, would abandon us in the middle of the journey. Some of the decisions of the Board and for that matter, NIB, resulted in judgment debt of over GH¢740,000.00.”

The group contends that the Bank of Ghana report failed to mention that the negative net worth and the negative Capital Adequacy Ratio (CAR) was arrived at after it had impaired a total investment of GH¢17.5 million (GH¢19.8 million in June 2019) in uniSecutirties Ghana Ltd, Gold Coast Fund Management Ltd and FirstBanC.

It must be stated that as at June 2019, the prior impairment net worth of FGSL was GH¢5 million, while the CAR stood at 15.2% (all positive) and wondered why the BoG was in a haste to collapse the company.

The staff are alleging that other banks as well as Savings and loans companies whose positions are worse off than the First Ghana Savings and Loans Limited have been kept afloat, a situation they say warrants the revocation of the action y the Central Bank against FGSL.

The Bank of Ghana on August 16, 2019 revoked the licences of some twenty-three (23) insolvent savings and loans companies and finance house companies.

BoG in a statement explained that the actions “were taken pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the licence of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent.

The Bank of Ghana has also appointed Mr. Eric Nana Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930.”