16th July 2024

Eric Nana Nipah, receiver for collapsed savings and loans and microfinance institutions

The Receiver of the collapsed financial institutions, Eric Nana Nipah, has disclosed that properties belonging to the collapsed 347 Microfinance Companies and the 23 Savings & Loans and Finance House Companies are being auctioned, starting yesterday.

This is the latest move in the effort to recover a major part of the value of assets owned by the capital deficient, and consequently liquidated, financial intermediaries so as to refund the government which has borrowed money to pay off their depositors.

A statement by the Receiver indicated that a consortium of auctioneers, Wildos Mart, Broadway Mart, and Yakamata Mart, had been appointed to conduct the auction.

The statement added that “the sale of the chattels of the resolved MFIs and S&Ls will be conducted at the respective branches of the resolved MFIs and 23 S&Ls across the 16 regions from Monday, March 8, 2021 until all items are sold out.”

“Chattels to be auctioned include air conditioners – split/window, desk-top computers, fridges, water dispensers, swivel chairs, executive office tables/chairs, leather sofas, couches, flat-screen television sets and generators,” it added.

Low recoveries

So far, the government has borrowed close to GHC20billion to issue financial resolution bonds which have been used to refund deposits lost to the liquidated institutions. While the largest chunk of this has been used to refund deposits held in liquidated commercial banks, the smaller financial intermediation companies – primarily savings and loans companies and microfinance institutions – have a large number of retail depositors who are most vulnerable to a loss of their deposits.

According to the Receiver, as at the middle of last year, for the 347 microfinance companies, 23 savings and loans companies and the 39 micro-credit companies, GHC598million had been recovered out of the targeted assets of GHC2.9 billion. Updated statistics on this, as at the end of 2020 have not yet been made public.

The amount was recouped from loan recoveries (GHC44 million), placements and investments (GHC495 million), balances transferred from other banks (GHC50 million), sale of vehicles (GHC4 million) and cash in vault (GHC5 million).

Mr Eric Nana Nipah has attributed the low level of recoveries to the poor quality of assets of some of the institutions, diversion of assets to other institutions or to personal ownership in order to hide them from the authorities, and the earlier misstatement of a significant proportion of declared assets by some of the liquidated companies.

“Some of the institutions do not have records of their assets at all, and for some of them, we do not even have records to validate depositors claims. Another reason is that some of the assets identified are encumbered – they had been used by some of the institutions as collateral and security for monies taken from other institutions,” Mr Nipah lamented last year.

Involving EOCO

Consequently, the Receiver last year made a report to the Economic and Organized Crimes Office (EOCO) to help with the tracing of assets of the affected institutions.

“We have involved EOCO in the tracing of assets and EOCO has done some good work in this area, where they have been able to trace some assets of these institutions. We forwarded the list of the top 10 institutions from whom we have received the highest claims from depositors to EOCO and asked it to do some investigations to trace the assets of those institutions,” Mr Nipah confirmed.

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