Financial Sector Cleanup: All Customers To Receive Cash Instead Of Bonds

All customers of the collapsed micro finance, savings and loans companies will effective Wednesday, September 16, 2020 receive cash instead of the earlier promised government backed bonds.
This follows the decision to convert all the government backed non interest bearing commercial paper (bonds) into cash at no discount in respect of the payments to affected depositors of the collapsed companies.


The Receiver, Eric Nana Nipah made this known in a press statement issued Tuesday evening [September 15, 2020].

The new arrangement affects only depositors of the 347 microfinance companies and 23 savings and loans whose claims have been validated in the resolution process.

In the statement copied to Graphic Online, the Receiver explained that the decision had become necessary due to concerns raised by affected depositors in relation to the bonds.



“The Depositor Payment Scheme set up by the Receiver/Official Liquidator to administer and fully settle all valid depositor claims in the resolution process has largely been successful; however an area of concern for most of the affected depositors is with the features of the Commercial Paper [Bond] used to partially settle the indebtedness of these
resolved companies to those depositors whose claims were not fully extinguished by the payment of cash to them.”

“These depositors have indicated that the features of the Bond, being non-interest bearing and with a tenor of five years do not make the Bond commercially attractive, thus creating a significant loss in value of their claims to them.”

He added that the new arrangement would also provide additional liquidity to the financial sector.

“Government has made available to the Receiver/Official Liquidator additional cash amounting to approximately GH¢3.56 billion, equivalent to the total value of the Bond component of funding required to fully satisfy the indebtedness of the resolved entities to their body depositors.”


“It is the expectation that this additional cash of approximately GH¢3.56 billion will replace the Commercial Paper which has been issued by government in favour of affected depositors of these companies in resolution.”

Implication



Consequently, depositors who have either received or are due Commercial Paper in partial satisfaction of their claims will now receive CASH payments at no discount for the Commercial Paper they have either received or is due to them, the statement explained

“Please note that depositors who have already discounted all or part of their Commercial Paper will receive a full refund in cash of the discount they suffered,” it added.

“As a result of this new funding arrangement provided by government, all valid depositor claims in the resolution exercise worth GH¢6.49 billion in value are being fully settled in CASH.”

“Notice is hereby given that with effect from Wednesday 16 September 2020, affected depositors may contact any branch of Consolidated Bank Ghana Ltd (“CBG”) the paying
bank to access their newly created Cash accounts which were originally designated as Commercial Paper (Bond) accounts at the bank ie CBG.”

Source: Graphiconline

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