A number of top executives of Cal Bank and 2 non-executive board members have lost their positions as part of urgent measures to address financial impairments and restore its capital base. The bank, which is racing to repair its financial position, is focused on a comeback after suffering significant setbacks.
According to The High Street Journal sources, the executives pushed out within the past few months, include key figures such as the Head of Treasury, Head of Finance, Head of Custody and Executive Head, Finance and Operations, Chief Risk Officer, and Head of Business Development. Other affected roles are the Head of Fixed Income and the Head of Corporate Banking. The sources also reveal that the Head of Treasury Back Office and two Corporate Banking Relationship Managers are being sought by the bank.
Two non-executive directors have also been removed, although the specific reasons for their dismissal remain unclear. These personnel changes are reportedly linked to a GH¢1.5 billion loan facility that went bad, with suspicions of internal collusion among the affected executives. This major shake-up follows the recent appointment of a new Managing Director, whose predecessor was reportedly pushed to retire in earlier restructuring efforts.
To address the leadership gaps created by these firings, the bank has engaged an experienced banking consultant, who previously held a senior treasury role at an international bank (name withheld), to help find suitable replacements for the sacked officials. In addition, the Bank of Ghana has set a deadline for CalBank to resolve its internal issues by the end of November 2024.
The bank’s financial troubles became evident earlier this year when it faced serious impairments that greatly reduced its capital, forcing it to initiate a rights issue in a bid to raise GH¢600 million. However, the bank was only able to raise GH¢145.8 million, just 24.3% of the target. This amount barely exceeded the minimum threshold of GH¢120 million required.
The Rights Issue faced complications when a major individual shareholder Daniel Ofori contested the bank in court, alleging inadequate disclosure of the impairments. This legal challenge resulted in a suspension of the Rights Issue proceedings until a settlement allowed the transaction advisors to declare the outcome.
Following the shortfall in funds raised through the rights issue, CalBank turned to a private placement to secure the remaining GH¢454.2 million needed to meet its capital requirement. While potential investors were identified by July, the bank has yet to finalize a deal.
Meanwhile, the bank reported a significant financial recovery in the first half of 2024, with profit after tax rising by 49.4%. One of the key achievements was the reversal of shareholders’ equity, which improved from a negative GH¢18.49 million at the end of 2023 to a positive GH¢112.9 million by June 2024. This improvement was largely driven by the GH¢145.8 million raised through the rights.
As one of the few remaining non-state indigenous banks in Ghana, CalBank has been a key player in the financial sector for over three decades. Despite having successfully navigated the banking sector cleanup in recent years, the bank now faces its most significant challenge yet. Many market observers hope that the Bank of Ghana will provide support to the bank’s board and management, enabling them to overcome this challenge and regain stability.
Source:thehighstreetjournal.com