Gov’t commits GHS3.1bn to support investors of failed asset management firms

The Akufo-Addo government has said it has committed an amount of GHS3.1 billion “toward supporting investors in failed asset management companies regulated by the Securities and Exchange Commission (SEC)”.

On 8 November 2019, SEC revoked the licenses of 53 Fund Management pursuant to Section 122 (2) (b) of the Securities Industry Act, 2019 (Act 929), which authorises SEC to revoke the licence of a market operator under some circumstances.

SEC, in a statement, explained that the revocation followed the companies’ failure to “return client funds which remain locked up and in a number of cases, have even folded up their operations.”

The full list of the affected institutions at the time: 

1.   All-Time Capital Partners Limited

2.   Alpha Cap Securities Limited

3.   Axe Capital Advisors Limited

4.   Apex Capital Partners Revoked

5.   Beige Capital Limited Revoked

6.   Brooks Asset Management Limited

7.   Cambridge Capital Advisors Limited

8.   Canal Capital Limited Revoked

9.   Corporate Hills Investment Ltd.

10.                Dowjays Investment Limited

11.                EM Capital Limited Revoked

12.                Energy Investments Limited

13.                Fromfrom Capital Limited

14.                Frontline Capital Advisors Limited

15.                FirstBanc Financial Services Limited

16.                Galaxy Capital Limited

17.                Gold Coast Fund Management Limited

18.                Gold Rock Capital Management Limited

19.                Goldstreet Fund Management Limited

20.                Global Investments Bankers Limited

21.                Heritage Securities Limited

22.                Ideal Capital Partners Limited

23.                Integrity Fund Management Limited

24.                Intermarket Asset Management Ltd

25.                Kripa Capital Ltd.

26.                Kron Capital Limited

27.                Legacy Financial Services

28.                Liberty Asset Management Limited

29.                Kamag Kapital Limited

30.                Mak Asset Management Limited

31.                Man Capital Partners Limited

32.                Mec-Ellis Investment(Ghana) Limited

33.                McOttley Capital Limited

34.                Monarch Capital Limited

35.                Mutual Integrity Assets Management Limited

36.                Nesst Capital Limited

37.                Nickel Keynesbury Limited

38.                Nordea Capital Limited

39.                Omega Capital Limited

40.                Procap Finance Company Limited

41.                QFS Securities Limited

42.                SGL Royal Kapita Limited

43.                Sirius Capital Limited

44.                Strategic Hedge Capital Limited

45.                Standard Securities Limited

46.                Supreme Trust Capital Limited

47.                Tikowrie Capital Ltd.

48.                Unisecurities Limited

49.                Universal Capital Management

50.                Ultimate Trust Fund Management Ltd.

51.                Utrak Capital Management Limited

52.                Wealth Vision Financial Services Limited

53.                Weston Capital Limited

Voluntary Cessation

1.   HFC Capital Partners Limited

2.   Attai Capital Limited

3.   Serengeti Capital Limited

4.   Indigo Investment Management Limited

5.   Verit Investment Advisory Limited

In its recently-launched 2020 manifesto, the governing party said those who invested in the collapsed asset management companies will be given monetary support.

Also, the NPP said as of the end of the first quarter of 2020, a total amount of GHS13.6 billion has been spent on the resolution of failed banks, Specialised Deposit-taking Institutions (SDIs), Micro Finance Institutions (MFIs), the establishment of the Consolidated Bank Ghana Limited (CBG), as well as the capitalisation of the Ghana Amalgamated Trust (GAT).

“Additionally, with the President’s directives to pay fully all depositors whose funds were locked up with the failed SDIs and MFIs, an amount of GHS5 billion was spent. This brings the total expenditure on financial sector interventions as at June 2020 to GHS18.6 billion”.

In addition to the GHS3.1 billion support to investors who fell victim to the collapse of the fund management companies, the total amount used by the government to clean the financial sector would be GHS21.60 billion.

The NPP said it “inherited a weak and fragile financial services sector from the Mahama-led NDC Government. Many financial institutions had either collapsed or were on the verge of collapse”.

It said: “Many were not paying their depositors or employees at all or regularly: There were countless instances where customers made long journeys to withdraw as little as GHS200 only to be asked to come another day.

“These failures were a direct result of a system of poor licensing and regulation, non-existent capital, weak corporate governance characterised by related-party transactions, and political influence-peddling among others.

“Many innocent people – depositors, investors and employees – suffered the consequences of these grievous lapses.

“The Mahama-led NDC Government and the management it put in place at the Bank of Ghana, as well as at the Securities and Exchange Commission, had enough time to address these failures, but failed to take action.

“Bank of Ghana was, for example, aware of the impending failures in 2015, in the case of banks, and as far back as 2012, in the case of savings and loans and micro finance companies”, it added.

In order to clean up and strengthen the sector and prevent its collapse, the NPP said “the new management of Bank of Ghana, which we installed, revoked the licenses of 9 banks, 23 savings and loans and 386 microfinance companies”.

“The central bank did this to protect the entire financial system, and preserve the hard-earned savings of hardworking men and women across the country. The Securities and Exchange Commission also revoked the licences of 53 fund managers for the same reasons”, the manifesto explained.

The clean-up exercise, and the government’s decision to step in to provide financial support, the manifesto noted, “ensured an orderly exit of the failed institutions, so that over 4.6 million depositors have access to their deposits, and 81,700 investors to their investments, and, over 10,000 jobs saved to date”.

“The financial support provided by the Akufo-Addo government, ensured no depositor would lose a pesewa of their savings. All depositors of the banks, savings and loans, and microfinance institutions, by the end of September this year, would have received a full, 100% refund of their deposits. Employees, whose salaries and benefits had remained unpaid by the defunct institutions, have now been paid or are being paid by the Receivers”, it enumerated.

The document added that: “The alternative would have been millions of depositors losing their savings and over 10,000 individuals losing their jobs”.

Furthermore, it said the nine indigenous banks that were closed were, “to a large extent, taken over by other indigenous Ghanaian banks – GCB and CBG – ensuring stronger Ghanaian ownership in the banking sector”.

“GAT, with 100% Government of Ghana ownership, has also successfully invested in 4 indigenous banks to help them meet the new capital requirements. With GAT, Government saved over 5,400 direct and 12,000 indirect jobs, and ensured that the country retained nine indigenous banks instead of only four, after the increase in the minimum capital requirement for the banking industry. The transformational plan, being executed by GAT and the investee banks, will have a significant positive impact on these banks and the economy as a whole.

“The benefits of the clean-up exercise, including other regulatory reforms such as Bank of Ghana’s Corporate Governance Directive (December 2018) and Fit and Proper Persons Directive (July 2019), are evident for all to see: we now have a stronger and more resilient banking sector than we have ever had, and deposits in the banking system have increased significantly as customers’ confidence in the system has rebounded”, the manifesto argued.

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