Bank Failure in Ghana: What Accounted for the Collapse of Unibank?

Abstract

The continued and sustained growth of any economy is dependent on a strong and robust financial sector. The Bank of Ghana in a bid to reform and ensure stability of the sector, withdrew the licenses of nine banks in Ghana, one of which was uniBank Ghana Limited. This study aims at finding the reasons why uniBank failed from the perspective of former staff. The study gathered qualitative data through interviews and quantitative data from annual reports of the bank. The study found over ambitious expansion drive, investment in none core banking actives such as media, financial misreporting and the institutionalisation of business promotion as the main method of deposit mobilisation. Based on the findings, the study recommended that Bank of Ghana should be more proactive in dealing with failed banks and should also involve the Ghana Association of Bankers in a peer mechanism to correct the imbalances in the banking sector. For the universal banks, they should not give interest rates that they cannot sustain. Universal Banks should stay in their core banking business and only invest in other business that they have expertise. In addition, expansion should be done in moderation and family members of shareholders should not be engaged in the core management of the banks. It is further recommended that this study should be replicated on all the other eight universal banks that were collapsed in 2017/2018 financial year.