uniCredit is praying the Human Rights Division of the High Court to dismiss the action of the central bank.
In a writ filed on Monday, 19 August 2019, Hoda Holdings Limited, the mother company of UniCredit, is seeking “an order of interlocutory injunction restraining the respondents, their agents, assigns, privies hirelings or otherwise howsoever described, from interfering with the operations of uniCredit Ghana Limited and to refer the subject matter of the instant application to arbitration.”
The BoG has, on Friday, 16 August 2019, revoked the licences of 23 insolvent savings and loans companies and finance houses including uniCredit.
The central bank’s action was 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 Nipah as the Receiver for the specified institutions in line with section 123 (2) of Act 930.
Bank of Ghana’s reasons for revoking uniCredit’s licence:
uniCredit Ghana Limited (uniCredit), formerly Kantamanto Savings and Loans Company Limited, was given an operating license in October 1995 and commenced operations on 1st November 1995.
In 2006, the Institution was acquired by the Hoda Group of Companies and subsequently, its name was changed from Kantamanto Savings and Loans Limited to uniCredit Ghana Limited in March 2007.
The Institution is currently overexposed to a related party, uniSecurities Limited, a sister company. The institution’s inability to access its funds from uniSecurities, even though overdue, has resulted in severe liquidity challenges and its inability to meet withdrawal requests of customers. uniCredit Savings & Loans Ltd. was found to be insolvent with a negative capital adequacy ratio and negative net worth following the Bank of Ghana’s assessment as of December 2018.
The Bank of Ghana directed the Board and Management of the institution to immediately inject additional capital to address the capital deficiency but this has not been successful.
The specific issues that led to the revocation of the licence of the institution included the following:
a. The institution’s adjusted Net worth of negative GH¢221.32 million as at end May 2019 indicates that its paid-up capital is impaired in violation of Section 28(1) Act 930.
b. The institution’s adjusted capital adequacy ratio of negative 97.83% as at end May 2019 is in violation of Section 29(2) of Act 930. This is mainly due to the nonperforming related party exposures of GH¢160.10 million to uniSecurities which is far in excess of its negative net worth.
c. The Institution has been breaching the statutory cash reserve ratio requirement since April 2018.
d. The institution is unable to meet the deposit withdrawals of customers due to its severe liquidity challenges. The Bank of Ghana has been receiving many complaints from the institution’s customers about their inability to access their funds.
e. The institution has a high percentage of non-performing loans.