Insolvency is nothing in the presence of market confidence according to founder of defunct Capital Bank

The founder of defunct Capital Bank, William Ato Essien has questioned the Bank of Ghana description of his as insolvent at the time it was closed down.

Ato Essien

Speaking on Good Evening Ghana programme on Accra-based Metro TV, Mr Essien said insolvency is only a sociological concept and not a mathematical principle.

He explained that although the central bank adjudged his bank as insolvent, it would have been able to turn around its fortunes in the long run.

He added that this could have been done in the face of a very confident banking system.

“An insolvent bank, in the presence of market confidence can correct the insolvency. A solvent bank in the presence of no market confidence will collapse…Insolvency is not a mathematical concept, rather a sociological concept.”


And you have the central bank do a press conference and mentioned the name of a bank, what do you expect to happen? People will go for their money,” Mr. Essien added.

Capital Bank and UT bank were the first to have their licences revoked by the Bank of Ghana when it started the banking reforms. The two banks were taken over by GCB Bank on August 2017 in a purchase and assumption transaction.

GCB took over the good assets of the two banks while the Bank of Ghana appointed a receiver to ensure the realization of other assets for the purpose of paying debtors among others.

At the time the governor said that “UT Bank and Capital Bank were heavily deficient in capital and liquidity and their continuous operation could have jeopardized not only their depositors’ funds, but also posed a threat to the stability of the financial system.”

“It, therefore, became necessary for the Bank of Ghana to revoke their licenses and approve a Purchase and Assumption (P&A) transaction to allow GCB Bank, a large bank with the right balance sheet, to take over all deposits and selected assets of UT Bank and Capital Bank.”

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