Gov’t, Finatrade’s GH¢220m led to our collapse – Royal bank

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The Royal bank is blaming the government for contributing to the bank’s woes and subsequent revocation of its license.

The bank believes it would have been avoided in the consolidation had the government paid its 150 million cedis debt to the bank.

A report on the Royal bank’s correspondences with the central bank to resolve the bank’s liquidity challenges also claims that the regulator did not grant the bank [Royal] ample time to address the major liquidity issues it faced during the period.

The Royal bank is among five local banks that have been merged into the Consolidated bank.

The others are; Unibank, Sovereign bank, Beige bank and the Construction bank.

No chance to recapitalise

According to the Royal bank, though it had secured support to the tune of 270 million cedis from the central bank, it was in the process of injecting some 300 million cedis which would have turned around the fortunes of the bank.

The bank also cited its exposure to panic withdrawals as a drain on its capital.

This it said occurred mainly during major announcements by the Bank of Ghana such as the revocation of the licenses of UT and Capital banks in August 2017 as well as the introduction of administrators for Sovereign bank and Unibank in February 2018.

Meanwhile, as part of the recapitalization plan for the 400 million cedis minimum capital, the Royal bank says it had two options; investments by external investors [Emerging Capital Partners acting through Oakwood Green Holdings] or a merger with Omnibank.

Reaction to BoG’s basis for revocation of license

Reacting to the central bank’s basis for revoking the bank’s license, the Royal bank disputed claims of High Non-Performing Loans which it blamed on the government’s indebtedness as well as the exposure to the finatrade debt owed most banks.

Also, the Royal bank maintained that it couldn’t have mis-reported issues to the Bank of Ghana as all the capitalization plan were approved by the regulator.

Again, the bank is disputing the amount quoted by the central bank as shareholder transactions.

The Royal bank insists all such transactions were done at arms’ length and its  audited accounts show the figure totalled 49 million cedis.

By: Pius Amihere Eduku/citibusinessnews.com/Ghana