A Press Statement issued by the Receiver for the 347 collapsed Microfinance companies and 23 Savings and Loans and Finance House Companies indicated the status of full payments to depositors.
“Update on full payments to depositors whose claims have been validated in the resolution process” the statement added
IN THE MATTER OF THE BANKS AND SPECIALISED DEPOSIT-TAKING INSTITUTIONS ACT, 2016 (ACT 930)
IN THE MATTER OF THE RECEIVERSHIPS OF THE 347 MICROFINANCE COMPANIES AND THE 23 SAVINGS & LOANS AND FINANCE HOUSE COMPANIES
UPDATE ON FULL PAYMENTS TO DEPOSITORS WHOSE CLAIMS HAVE BEEN VALIDATED IN THE RESOLUTION PROCESS
In accordance with Section 123 of the Banks and Specialised deposit-taking institutions Act, 2016 (“Act 930”), Bank of Ghana (BoG) appointed Eric Nana Nipah, a Director of PricewaterhouseCoopers (Ghana) Limited (PwC) as Receiver for the purposes of winding down the affairs of 347 Micro Finance Companies (“MFCs”) as well as 23 Savings and Loans and Finance House Companies (“S&Ls”) whose licenses were revoked on 31 May 2019 and 16 August 2019 respectively.
As indicated in the Press Release of Monday 24 February 2020, the primary duties of the Receiver include:
- recovering and maximising asset realisations for the benefit of Creditors including mainly Depositors; and
- realising assets and distributing them in accordance with Section 135 of Act 930, to satisfy the indebtedness of these institutions to their body of Creditors including depositors, to the extent possible.
Status of Depositor payments prior to 24 February 2020
Based on Section 135 of Act 930, the priority of ranking regarding Creditor payments in the above receiverships place depositor payments down the ranking ladder and at the level of Unsecured Creditor payments.
Given challenges experienced in the realisation of assets of these resolved companies, and considering the order of Creditor payments per Act 930 enumerated above, full or partial settlement of depositor claims from asset realisations of these companies is likely to be minimal; in some cases, depositors of some of these companies are not likely to receive any payments in the resolution process.
In line with Government’s commitment to protect depositors funds however, and to shore up public confidence in the financial system, at the commencement of the resolution process, Government provided the Receiver with funds to cushion the immense financial burden that the very vulnerable depositors were likely to face in the receiverships of these resolved MFCs and S&Ls. Prior to 24 February 2020, out of over 360,000 depositor claims in number worth approximately GHS6.4bn received in the MFCs and S&Ls receiverships, as well as in the 39 Micro Credit Companies (“MCCs”) placed in Official liquidation, more than 320,000 in number of validated claims were fully settled in cash.
To fully settle the remaining approximately 40,000 depositor claims in these receiverships as well as in the official liquidation of the 39 MCCs, Government has provided additional funding by way of a combination of cash and bonds totalling approximately GHS5bn to the Receiver and Official Liquidator, to ensure that all outstanding depositor claims duly submitted and validated in the resolution process are totally satisfied.
Depositor payments from 24 February 2020 to 31 March 2020
The payment of the remaining approximately 40,000 depositor claims begun in earnest on Monday 24 February 2020 funded by the cash component of the GHS5bn amounting to GHS1bn.
As at Friday 28 February 2020, depositor claims of approximately 15,000 in number, worth over GHS745million have been transferred to Consolidated Bank Ltd (“CBG”) the paying bank, for payment to depositors, from the GHS1bn cash component of funds received from Government. We are in the process of reconciling with CBG, the number and value of depositor claims which have actually been paid to date. Payment of outstanding depositor claims which have been validated and agreed in the receiverships and official liquidation of the resolved institutions will continue this week and beyond and would be concluded by 31 March 2020.
It is expected that overall, approximately 352,0000 depositor claims will be fully settled with cash only by the conclusion of depositor payments and that the remaining 8,000 depositor claims (worst case scenario), worth approximately GHS4bn will be fully settled within this period i.e. by 31 March 2020 with a combination of cash and Bonds. Full details of the bonds to be issued to depositors whose claims will not be fully satisfied by the payment of cash alone will be disclosed in the course of this week.
Stakeholders may direct all concerns on the above receiverships to:
25 B Manet Towers
PMB CT42, Cantonments
Tel: +233 (0) 242 439 441/+233(0) 20 4904250/ 0550000966
ERIC NANA NIPAH