Apex Bank Bleeds

Ghana's rural banking sector is in turmoil, as the regulator ARB Apex Bank has failed to address the numerous problems.

This is evidenced by the fact that some rural and community banks last year had to be bailed out to the tune of GH¢5.7 million.

A report prepared by Apex Bank and sent to both Bank of Ghana and the Ministry of Finance, confirmed the foregoing.

The bank, which reported a 41 percent decline (according to its report to BoG/MoF) in its key market product in 2014 (Apexlink), has spent huge sums of money on luxurious vehicles and office modernization.

There are reports that renovation works are ongoing at Apex Bank's Kumasi and Bolgatanga branches while five new plush 2015 models of VW (with registration numbers GR 4351 - 55) estimated at a verified value of over GH¢750,000.00 have been purchased for management members.

In 2010, management bought similar versions of VW.
The board is also said to have approved the procurement of luxurious accommodation apartment for the MD at the cost of GH¢5,500,000.00, which is expected to further weaken the financial position of Apex Bank.

In the light of the developments, the Economic Organised Crime Office (EOCO) has written to the bank's MD to cooperate with it for investigations to begin.

Plight of RBCs
Currently, some 20 rural and community banks (RCBs) are in serious financial distress while 15 out of 135 RCBs are classified as strong by Apex Bank.

As at September 2014, 54 RCBs had not met the minimum paid-up capital of GH¢300,000.00.

About the same time, 31 RCBs were not able to meet the capital adequacy ratio requirement of 10 percent; 43 RCBs did not meet the 8 percent primary reserve requirement while 64 did not meet the 30 percent secondary reserve requirement.

Also, an existing support facility for the training of RCBs at the Danish Embassy is also reported to be facing a terminal collapse due to differences in the use of the fund primarily influenced by the current MD.

DANIDA merger
Another concern is the proposed merger of RCBs expected to be facilitated by Apex Bank and DANIDA.  

Case of indictment
This paper has sighted another report that has indicted the Apex Bank for its handling of the rural finance wholesale fund (RFWF).

This is a fund provided by DANIDA to pre-finance term loans for RCBs.

The reports, prepared by a Danida Consultant, revealed that in the three years of operation of the RFWF, disbursements to RCBs have been weak and erratic, resulting in the loss of value of the funds at Apex Bank.

ICT charges
Other allegations are that there are several relatively expensive ICT-related charges on the account of RCBs which seem to weigh them down.

Insider sources at the bank revealed that the charges which are directly debited to their accounts are so huge that they are unable to treat the expenditure as profit and loss account item. It appears that the cost of these ICT-related charges is over-invoiced.

EOCO is currently investigating this and other procurement fraud issue, especially with the WAN.

The source said the regulator's relationship with RCBs and its donor partners has deteriorated in recent years.

It would be recalled that Raphael Kwame Tawiah, Head of IT at the bank's Manya Krobo Rural Bank, recently commented on the deteriorating fundamentals of the rural banking sector in Ghana.

Reaction from PRO
BUSINESS GUIDE spoke to Eunice Osei Bonsu, Head of Corporate Affairs Unit of ARB Apex Bank yesterday on phone about the issues.

Some questions were emailed to her by this paper on Monday.

But according to her, management of the bank was contemplating organizing a press conference to respond to the issues, adding that the MD was already on leave.

By Samuel Boadi
[email protected]