The founder of defunct Capital Bank, William Ato Essien has opened up on the revocation of the bank’s license in 2017 by the Bank of Ghana.
Mr. Essien speaking on Good Evening Ghana programme on Accra-based Metro TV said although the central bank adjudged his bank as insolvent, it would have been able to turn around its fortunes in the long run.
According to him, insolvency is a sociological construct rather than a mathematical principle adding that in the face of a very confident banking system, Capital Bank would have corrected its wrongs in the long run.
“An insolvent bank, in the presence of market confidence can correct the insolvency. A solvent bank in the presence of no market confidence will collapse…Insolvency is not a mathematical concept, rather a sociological concept.
And you have the central bank do a press conference and mentioned the name of a bank, what do you expect to happen? People will go for their money,” Mr. Essien said.
Mr. Essien’s Capital Bank was among the first casualty in the banking reforms undertaken by the central bank. The bank and UT Bank were taken over by GCB Bank on August 2017 in a purchase and assumption transaction.
GCB took over the good assets of the two banks while the Bank of Ghana appointed a receiver to ensure the realization of other assets for the purpose of paying debtors among others.
The governor noted that “UT Bank and Capital Bank were heavily deficient in capital and liquidity and their continuous operation could have jeopardized not only their depositors’ funds, but also posed a threat to the stability of the financial system.”
“It, therefore, became necessary for the Bank of Ghana to revoke their licenses and approve a Purchase and Assumption (P&A) transaction to allow GCB Bank, a large bank with the right balance sheet, to take over all deposits and selected assets of UT Bank and Capital Bank.”