UniBank’s Shutdown Violated Recovery Norms in Banking – Professor Lord Mensah
A Professor of Financial Economics at the University of Ghana Business School, Lord Mensah, has strongly criticised the collapse of UniBank, describing it as a decision that contravened fundamental banking principles.
Speaking on PM Express on Wednesday, July 30, Prof Mensah questioned the logic behind the bank’s shutdown during the financial sector clean-up, stressing that standard banking practices such as loss minimisation and recovery optimisation were not applied.
“In banking, there’s what we call minimising the loss and then maximising the recovery. And for me, this is a principle that’s a baseline for banking activities, be it at the central bank level or the lower bank level,” he stated.
According to him, the authorities failed to recognise the broader socio-economic implications of the decision, especially the ripple effects on government revenue, employees and the banking ecosystem at large.
“The existence of a bank takes several dimensions… You’re looking at government interest in there. You’re looking at employees’ interest. You’re looking at owners’ interest in the bank,” he noted.
Prof Mensah maintained that UniBank’s collapse overlooked these wider considerations, adding that banks were contributing significantly to national revenue through corporate taxes—estimated between 25% and 30% at the time.
He argued that the decision to shut down the bank essentially sacrificed the livelihoods of workers and the financial welfare of the state.
“People who are working and able to put food on the table for their kids… they’ve been able to manage their homes, put their kids to certain levels of education,” he added.
Touching on UniBank’s indebtedness, Prof Mensah acknowledged that while the bank reportedly owed some GH¢4.97 billion, it had offered GH¢2 billion in recovery—a move he believes should have been embraced.
“You have to take it,” he asserted. “Because in banking, as I mentioned earlier, you think about recovery, and then you minimise the possible losses.”
He described the entire financial sector reform as a process that ignored established banking norms and veered towards punitive motives.
“You come to realise that the principles of banking were not followed at the time… we were cleaning up the banking sector,” he remarked, adding that his fellow panellist, legal practitioner Martin Kpebu, “will say that the motive was more of witch hunting than following banking principles.”
Prof Mensah also questioned why the state chose to absorb the entire cost of the clean-up—estimated at over GH¢21 billion—when partial recoveries were possible.
“You’re talking about recovering GH¢2 billion… So why do you collapse the bank and then transfer all the possible obligations to the taxpayer?” he queried.
He concluded that the failure to apply core banking tenets during the sector’s restructuring raises serious questions about the true motivation behind the collapse of UniBank and other indigenous banks.
