A swathe of non-performing loans, some granted contrary to banking regulations, on the books of UT Bank contributed to the bankâ€™s collapse, an investigative report has noted.
A number of these breaches were noted in dealings with companies linked to UT Bank.
The Banking Act requires that bank loans granted to its related entities, not connected to the UT Group, should be classified as single borrowers.
This is for purposes of establishing a single obligor limit, i.e., the maximum amount a bank is allowed to lend, which stands at 10 percent of the bankâ€™s net own funds for unsecured loans and 25 percent of the bankâ€™s net own funds for secured loans.
But the report noted that several loan facilities exceeded the prescribed single obligor limit.
â€œThis behavior persisted over several years, and BSD examination reports have highlighted its prevalence in onsite inspection reviews,â€ the report stated.
â€œThe pervasive incidence of SOL [single obligor limit] breaches underscore the rather poor credit management practices, poor credit governance, and supervision,â€ the report added.
In some instances, UT Bank requested a waiver of the single obligor limit to â€œcover exposures emanating from the erosion of the bankâ€™s equity.â€
For example, On May 12, 2016, the BSD sought approval to grant a waiver request for a single obligor waiver made for debts in relation to Ibrahim Mahama, the CEO of Engineers and Planners.
There was definite concern over the loans granted Ibrahim Mahama per an emergency Board meeting held on May 20, 2016, cited in the report.
â€œThe board expressed great concern about Mr. Ibrahim Mahamaâ€™s inability to meet his obligations to the bank. As at May 2016, his total exposure was approximately GHS302m and he had made no effort to honour any of the assurances he gave when he met them on 29th March, 2016.â€
The report also noted that subsidiaries of Excel Courier, a company in which the MP for Efuttu, Alexander Afenyo Markin received an under-collateralized loan of close to GHS30.8 million from the bank.
The value of the collateral was Â¢990,000.
South African firm scared away
A South African private equity group, Leapfrog Investments, expressed interest in investing in UT Bank and undertook a due diligence probe of the bank in 2014.
Leapfrog noted that the top 20 loans UT granted, with a balance of GHS457 million had a high legal risk of loss.
Documentation for only 18 of the 2o most substantial credited exposures was provided
â€œEvidence of the approval of the credit committee of UT Bank Board has not yet been provided for 6 of the 18 facilities, nor have copies of the Board resolutions of the relevant borrows in respect of 4 of the 18 credit facilities.â€
â€œNo evidence of stamping had been seen on mortgages, and none of the mortgages had been registered with the companyâ€™s registry or collateral registry.
Also, â€œUT Bankâ€™s loan and loss provisions, as assessed by Leapfrog may have been understated by as much as GHS136 million,â€ the report stated.
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