ARB Apex Bank raises red flags over locked-up funds — Rural and community banks owed over GH¢100m

THE ARB Apex Bank has expressed worry about the impact of locked-up funds from the financial sector clean-up on the operations of rural and community banks in the country.

It regretted that although a lot of work has gone into pursuing the repayment of the locked-up funds, the moves to get the monies have not been successful, a phenomenon which continues to affect the smooth operations of the RCBs.

The Managing Director of the ARB Apex Bank, Alex Kwasi Awuah, said this when he addressed the 21st annual National CEOs Conference of Rural and Community Banks at Ho in the Volta Region at the weekend.

“It is unfortunate to say that several attempts made by ARB Apex Bank and the Association of Rural Banks to realise the funds have been unsuccessful. We have engaged the Securities and Exchange Commission (SEC), NTHC, and other key institutions but our efforts have not yielded positive results.

ARB Apex Bank would be engaging further with the Association of Rural Banks so that we can make an official representation to the Ministry of Finance.”

NTHC seeks bailout

The call comes at a time when the distressed stated-owned investment firm, the National Trust Holding Company (NTHC), has requested an urgent bailout from the government to enable it to meet its indebtedness to ailing RCBs across the country.

The RCBs have more than GH¢100 million locked up.

The GH¢500 million bailout request is also expected to help the trust to settle its numerous retail customers who have been victims of its liquidity crunch since 2019.

The company’s debt overhang has its roots in the financial sector clean-up exercise that occurred since August 2017.

Meanwhile the government is yet to respond to the call. With the growing pressure on the government to cut back on its expenditures to bring its debts to sustainable levels, it is not clear whether the RCBs request will be heeded any time soon to keep them afloat and help the rural economy.

Assurance

Mr Awuah expressed delight at the presence of the Second Deputy Governor at the conference and said: “We are confident that the Second Deputy Governor would also use her good offices to help us receive the necessary hearing on the matter of the locked-up funds.

Kindly rest assured that we shall do whatever is within our capacity to bring a closure to this very important issue sooner than later.”

New focus

In his advice to the CEOs, Mr Awuah said: “Going forward, let us be strategically minded by providing the right leadership for thriving RCBs. Armchair management should give way to aggressive business development. Let us chase the businesses, especially the medium, small, micro, and individual businesses in the communities in which we operate”.

According to Mr Awuah, the old ways of doing things must give way to aggressive business development programmes.

The ARB Apex Bank MD also noted that it was also incumbent on all CEOs to take time to understand their financial and prudential ratios so they can provide adequate guidance to their boards to make timely decisions when things are going wrong.

“Appreciating the ratios is the only way to deploy pre-emptive strategies to ensure that our banks continue to remain strong.”

“Furthermore, in spite of the challenging economic environment, let us be reminded that our products and services pricing should be affordable enough to encourage and entice majority of Ghanaians to do business with us. If our prices are too high, we risk driving our esteemed customers away.”

Eye on fraud

On the issue of fraud and financial malpractices within the banks, Mr Awuah urged the managements of the RCBS to ensure what he described as the “proper oversight of our employees”, by tightening the controls to prevent unbridled fraudulent practices which are becoming rampant in the sub-sector.

Let us also ensure that we develop good relationships with our Board of Directors to ensure harmony in the banks.

Leadership

“Let us be strategically minded by providing the right leadership for thriving RCBs. Armchair management should give way to aggressive business development.

Added appeal

President of the Association of Rural Banks, Oti, Volta, Larry Jiagge, also added his voice to appeals to the Bank of Ghana to help retrieve the locked-up funds from SEC and other regulated institutions.

He said locked-up funds were seriously affecting the operations of the RCBs.

Mr Jiagge added that when done, it would also help shore up the liquidity and the financial strength of the banks.

Source: Graphic online