Midland Savings Recorded Massive Losses

Michael Adjovu, MD of
Midland Savings & Loans Company

THE CENTRAL bank has
revealed Midland Savings and Loans Company Limited registered persistent
operational losses which made it difficult for it tooperate.

This culminated
in an adjusted negative capital adequacy ratio (CAR) and negative net worth for
the company as of August 31, 2018.

A Bank of Ghana
(BoG) report on the company which revealed this said Midland Savings and Loans
was over exposed to its related parties including Liberty Asset Management,
Liberty DMI Microfinance and Griffin Financial Services which was rolled over
in spite of the liquidity challenges it faced.

“The institution
was found to be facing liquidity challenges in January 2017. A subsequent
assessment indicated that the institution was undercapitalized and also facing
serious liquidity challenges,” according to the report.

The BoG report continued
that Midland Savings and Loans Company Ltd. recorded net worth of negative
GH¢148.92 million as of end May 2019 indicates that its paid-up capital is
impaired in violation of Section 28(1) Act 930.

“The
institution’s capital adequacy ratio of negative 311.91% as of end May 2019 is
in violation of Section 29(2) of Act 930.

“The institution
failed to conduct due diligence on counter parties resulting in the impairment
of some investments,”  it revealed.

Additionally, the
report said Midland Savings & Loans Company Ltd. consistently breached the
minimum cash reserve ratio requirement leaving a cash reserve requirement of
0.23% at end May 2019.

Also, the company
failed to keep accounting records in a manner that gives an accurate and
reliable account of its transactions.

As a result, the
company was unable to submit prudential returns regularly and could not provide
the various schedules that reconciled with key balance sheets such as loans and
investments.

Furthermore, the
company was faced with severe liquidity challenges, which made it unable to
provide adequate funds to run the various branches, thus rendering the branches
inactive.

“The inability of
the company to honour customers’ withdrawal request has resulted in customers
resorting to the use of their lawyers in filing claims on the institution and
complaints to the Bank of Ghana,” it mentioned.

The BoG said
since August 2018, it engaged the board and senior management on the need to
inject additional capital.

Midland Savings and Loans Company Ltd. was licensed by the BoG to operate as a Savings and Loans Company on October 21, 1996. It commenced full operations on March 13, 1997.

BY Samuel Boadi

Advertisement
Loading...