Monrovia – The financial sector of Liberia is prone to the collapse of banks and other providers of financial services.
Some banks operate for short time and later collapse while others struggle for years to expand and provide financial services in a small economy with huge unemployment where savings is not a normal tradition of many people.
Many of the commercial banks are clustered in Monrovia with no offices in all the fifteen counties either due to fewer customers outside Monrovia or limited economic activities in many parts of the country.
One troubled commercial bank, the First International Bank Limited (FIBLL) which collapsed after facing some financial problems has been rescued by a Ghanaian Company, the Ghana Growth Fund Company (GGFC).
FIBLL ceased operations few months ago and was locked up in negotiations for a takeover by the Ghanaian Company and a deal has now been finalized according to the Central Bank of Liberia.
In a statement issued Saturday, the CBL stated that the Board of Governors of the Bank has approved of significant portion of the assets and assumption of all the deposits of FIBLL and the new bank will now be known as the GN Bank Liberia Limited.
“The Board of Governors of the Central Bank of Liberia pursuant to the authority vested in the Bank under section 40 (13) of the New Financial Institutions Act of 1999 has approved the purchase of significant portion of the assets and assumption of all the deposits of FIBLL, except one large foreign depositor and one large creditor of FIBLL by GN Bank Limited, a new bank licensed by the CBL, which is owned by Ghana Growth Fund Company (GGFC). GGFC is already part of the Liberian financial system as the as the owner of the Liberian Enterprise development Finance Company (LEDFC).
LEDFC, as a development finance company, was licensed to provide financing to small and medium businesses.
As at January 26, 2016, it had extended a total loan of US$15 million. Some of the sectors that have benefited from such loans include the services sector, agricultural sector, health sector, education sector (in terms of financing for construction of schools), and waste management Ghana Growth Fund Company is a member of Groupe Nduom.
Groupe Nduom is a broad based multinational business group with investments in Financial Services, Technology, Investment Advisory and Management, Media, Management Consulting, etc.”, statement from the CBL disclosed.
According to the CBL, the FIBLL, with approximately US$21.5 million in assets as of March 31, 2016, will be closed as of Saturday, June 4 and the provisional administrator (PA) who was appointed on January 27, 2016 to take charge of the bank has been given the mandate to facilitate the sale of its assets and transfer deposits to the new bank as specified in the new agreement.
The CBL has indicated that the eight offices and two cash windows of the FIBLL across the country will reopen on today, Monday as branches of GN Bank Liberia Limited with a new Management team and Board of Directors and depositors of the former FIBLL will automatically become depositors of GN Bank Liberia Limited.
At the time of closure, the CBL disclosed that FIBLL had total deposits of approximately US$23 million in about 42,000 accounts.
US$18. 5 million invested
The CB has also disclosed that GN Bank Limited has brought in a total amount of US$18.5 million which the CBL says is adequate to meet the minimum capital requirement.
“GN Bank Liberia Limited has brought in a total of US$18.5 million which adequate to meet the minimum capital defined by the CBL and together with the purchased liquid assets and it provides sufficient protection for all deposits it has assumed.
The CBL as the Reorganization Authority, acting through PwC as its reorganization firm, will retain the remaining assets and liabilities for later disposition. Information concerning the loans and other assets of the former bank will be communicated to the concerned individuals and entities as soon as practicable”, the CBL furthered.
The FIBLL crisis led to the bank losing huge undisclosed sum of money. Like other Liberians banks the FIBLL had a history of internal theft.
In 2013, at least 15 persons at the bank were suspended and investigated in connection with a US$1.2M fraud but trusted sources within and amongst the investigators hinted that some of the bank’s executives were linked to the rip-off.
In 2011, the bank whose books were audited by Voscon Inc., Monrovia, Liberia reported that as at 31 December, 2010 shows an Assets Base of US$6.5 Million, Total Equity Capital of over US$7.6 Million, and a Deposits Base of US$10 Million.
The bank reported that its assets was just under USD 20 million and Deposits in excess of US$12 million, while an expected capital injection will push our equity base to over US$10 Million by the end of June, 2011.
FiBank Liberia was a member of the FiBank Group which has banking and insurance subsidiaries in four other African Countries namely:
The Gambia, Sierra Leone, Guinea, and the Democratic Republic of Congo. The bank in recent years expanded its operations to include eight branches and five MoneyGram and Western Union Retail Outlets in the capital suburbs and in the provinces.
The bank recently obtained from the AfricanExport-Import Bank a US$10 Million Facility on non-recourse basis and a US$3 Million Trade Finance Facility to stimulate import-export activities throughout Liberia.