Business General

Capital Bank was insolvent at the time of takeover – Ato Essien

Chief Executive of defunct Capital Bank, William Ato Essien has admitted before a court in Accra that the bank was indeed insolvent at the time it was added to GCB Bank.

Mr. Essien is being tried for his role in the collapse of the bank, including the misapplication of a GH¢620 million liquidity support from the Bank of Ghana.

He has, however, maintained that the bank would have thrived if given the time and space.

When quizzed by his lawyer, Baffour Gyau Bonsu Ashia on how solvent Capital Bank was just before the takeover, William Ato Essien said the bank was “below the capital adequacy ratio.”

Asked to explain what that meant, Mr. Essien said “as per the ratios from the Central Bank, we were insolvent.”

But, he insisted that “it is a normal occurrence” in the industry and would have been rectified with an “injection of more capital” into the bank; a”classification of non-performing loans”, and a recovery from the bad bank to income surplus”.

According to him, inadequacy in capital ratio was the only problem Capital Bank faced with respect to the Bank of Ghana.

William Ato Essien had tried unsuccessfully to get the case against him dismissed after the prosecution closed its case months ago.

Mr. Essien, together with others, are facing 26 different counts of charges.

Financial sector clean up
Capital Bank was found to be owing GH¢468 million, which was said to have arisen due to negligence from the Board of the then financial institution.

It was part of the nine banks that collapsed over a 12-month period starting in August 2017.

The other banks were UT, which was taken over by the state-owned GCB Bank along with Capital Bank.

Beige Bank, Sovereign Bank, Construction Bank, uniBank, and Royal Bank, were consolidated into the Consolidated Bank of Ghana.

The decision to collapse all the banks was primarily because they had all become highly insolvent because of various reasons, including poor corporate governance decisions.

The crisis saw the deposits of some 1.5 million Ghanaians affected, though the government stepped in to safeguard their monies.

Protecting depositors has so far cost the state GH¢ 9.9 billion, according to the Finance Minister.

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