Pastor Mensa Otabil in his sermon on Sunday suggested he was oblivious of the imminent takeover of his bank (Capital Bank) alongside another that became public last Monday. This has got me thinking about how such major decisions are rolled out by the Central Bank before they are made public.
I must admit that my knowledge of banking, mergers and acquisitions may be suspect and so will not attempt any pontification in that regard. I must also place on record that I empathise with any business that struggles. I spent the best part of 2010 till 2014 growing a business and if anyone has attempted any such thing, where your salary comes from your own sweat, mocking a struggling business wouldn’t be your portion.
It is sad that two indigenous banks, one of which became a household brand, have gone down the way they did. But the actual takeover must not surprise the owners and all associated with the running of these institutions. I listened to a clip where the Managing Editor of ‘The Insight’ newspaper, Kwesi Pratt, catalogued the tussle that ensued after his paper published a memo addressed to the board of Capital Bank. The Memo was subsequently published for our consumption.
One thing was clear, the bank had not been managed well. The findings of a committee report that became public subsequently suggested that; some expenditure items did not reflect on the bank’s books, some expenditure made in the bank’s name had no documentary evidence, there were deposits that did not reflect on the Bank’s books, that individuals’ liabilities had been taken over by the bank – thereby becoming the bank’s liabilities, that the Bank’s investment with other institutions were used to offset personal liabilities, that huge expenditures were made in the name of protocol without records, to name but a few.
It never struck me that Mensa Otabil and the International Central Gospel Church had forayed into the once thriving financial service industry. However, the shareholding structure of the bank would later reveal that the two found favour with the growing appetite of all and sundry to shore up their earnings. Both banks were savings and loans companies that developed into traditional (universal) banks. What they probably missed was that traditional banks could not just confiscate assets of borrowers and dispose them off in retrieving loans contracted by their customers. That belonged to the ‘bugabuga’ savings and loans regime of old and UT Financial Services benefitted a great deal from that. Many have celebrated UT’s takeover due to their own penchant for loans that they have no intentions of repaying. I still think UT did a good business there and soon, many joined the bandwagon.
I grew up listening to Pastor Mensa Otabil, and I’m sure many of those who will read this piece did too. Therefore, we have a certain respect and reverence, not just for his person but also his teachings. Maybe the good old Pastor should have done himself a favour by not focusing on the collapse of his bank in last Sunday’s sermon. There’s a reason judges are advised to recuse themselves from cases they are emotionally involved in. There’s a reason why lecturers are forbidden from entering emotional relations with students and there is a reason why medics have to seek professional treatment from others, other than themselves. Maybe Albert Ocran should have mounted the Podium on Sunday or my good friend Samuel Atta-Akyea or any other person, so that Pastor Otabil, who may not be in the right frame of mind, could brood over his loss. He’s human and must be allowed to shed tears and lament over such a huge loss. But the pulpit wasn’t the place for it. And yes, who were those applauding? What was the applause for? I know Pastor Otabil’s advise would have been that in times like this, ‘silence is golden’. But he failed to heed his own counsel. In times of afflictions, what counsel would he proffer the multitude, who lean on his word, each day?
If Pastor Mensa Otabil isn’t an AWOL shareholder, he should have known the fate that was to befall him. He should be thankful to government for taking that cloud off his shoulder, because one more DKM-like collapse, and the entire sector will begin to crumble. It is amazing the NDC communicators didn’t latch onto the failings of his bank in the face of their unending banters. Could you imagine what the word would have been if the Mahama administration withdrew the life support it offered Capital bank? I leave that for your imagination.
My deep throat sources have revealed that both banks had been on ‘life support’ for some time now. And I’m sure this is no new information. In fact, their licenses should have been revoked a long time ago, but governments generally don’t fancy taking over banks due to the impression it conveys and the effect it could have on both investors and the general economy. But the new administration had to implement these very unpopular takeovers with the International Finance Corporation and the World Bank snoring down its almost choked throat.
But those who are briefed in the industry know that such takeovers are cheap for acquisitions. One is not fully briefed about why GCB became the most preferred of the three banks that showed interest in taking over the assets and liabilities of these failing banks. But one hopes it was done in good faith and that GCB would not risk being saddled with the liabilities as depositors move with their cash to more progressive banks. Any Ghanaian who does business with GCB is aware of its processes.
Back in Legon, we used to tease students whose loans came through GCB that the bank traded with the funds for weeks before making the cash available. Their colleagues saving with the two other banks on campus then, (Stanchart and Barclays), would be halfway through their loans before Commercial Bank disbursed theirs. Again, their single ATM on campus was almost always down. I can’t pretend to know what the situation is currently.
Industry players know that Savings and Loans companies that metamorphosed into universal banks have suffered for the most part, due to the strict regulation regime of the Central Bank over the latter. The lax regime that exists in the Savings and Loans environment coupled with their ‘cheap staff’, unorthodox interest rates and ‘crude’ recovery methods made them high turnover institutions, until charlatans flooded the sector.
Therefore with the little that we know, we must be worried that the founder of the International Central Gospel Church, Pastor Mensa Otabil in a seeming rebuttal to the public criticism referred to some people as ‘looking like insults’. What would Jesus Christ have done? The Preacherman is also heard as saying ‘some people feel up when he is down’ and his congregation urges him on. In my language, it is called “mpoa twa”. I wont translate it. That’s what the preacher whose name came up in Nairobi two weeks ago as a respected Man of God resorted to.
I dare say that many young people must feel let down by how the long-standing Preacher approached this subject matter. He suggested only a certain type of people have the right to insult him, I dare say again that he had it all wrong!Unless of course he doesn’t follow the teachings of JesusChrist, he seem to be putting himself above the Savior, whose coming was ordained by the Father Himself.
I challenge the Preacherman to desist from pronouncing on the subject and stop creating the impression that he is above failure or someone robbed him of his bank. Because everyone can fail. Even Christ at a certain point wanted ‘the cup of suffering to pass him by’. Let the lessons of the failure of these banks serve as warnings to all enterprising young people. And that would only sink in when there is open admission of wrongdoing on the part of the board and management of Capital Bank and UT Bank. His pronouncements in my view were at variance with the claim that he ‘clung onto God’s promise of peace’. You don’t need any miracle to know when one clings onto God’s promise of peace. They don’t have to say it. It is palpable.
As the Central Bank’s new minimum capital requirement increases next month, more banks are expected to go through similar hurdles, if their books remain same. Unfortunately, all the named banks are wholly Ghanaian owned. Not a single one of the Nigerian banks has been penciled for takeover and that is why we must all begin asking ourselves how these indigenous banks are failing in the race with their counterparts from next door.
Truth is deadlines given for additional capital injection into the two banks long expired and three years was long enough for the two banks to either correct those anomalies or phase out but with the findings of Capital bank’s own internal committee, the Preacherman needed to be forthright and not create an impression that the events took him by surprise because they didn’t.
I rest my case.
By Kobby Gomez-Mensah
The writer is a Ghanaian broadcast journalist based in Cairo, Egypt