Bank belonging to Ghanaian millionaire in Liberia reportedly faces insolvency challenge

SIB Liberia Limited (SIBL), a bank owned by a Ghanaian millionaire, is reportedly on the brink of insolvency in Liberia, FrontPage Africa has reported.

The bank’s financial trouble is linked to its acquisition of liabilities from the defunct First International Bank Liberia Limited (FIBLL), a move that has severely strained its operations.

This trouble started in 2020 when the bank decided to take over the First International Bank Liberia Limited (FIBLL), assuming its liabilities totaling around US$23 million.

The bank paid US$14.7 million of the legacy depositors’ liabilities inherited from the defunct FIBLL and relied on the Central Bank of Liberia (CBL) to pay the remaining US$8.5 million to the legacy depositors, some of whom had threatened legal action against the bank.

It had complained that paying US$14.7 million out of its working capital significantly impacted its cash flows. Accordingly, the bank appealed to the CBL to intervene in repaying the outstanding liabilities to the legacy depositors, arguing that the debt rightfully belongs to the Government of Liberia and the Central Bank.

The CBL board of governors, after a thorough review of the matter over two years, upheld the bank’s request and approved the payment of the outstanding legacy deposit liabilities of US$8 million. However, this payment had not been executed at the time of the letter.

Uncertainty

Amid these concerns, customers have been rushing to withdraw their savings, further exacerbating the situation. In response, the Central Bank of Liberia has intervened to stabilises the situation, but public confidence remains shaken.

Despite reassurances from the bank’s management, public panic has set in, with customers flocking to branches in an attempt to secure their funds.

Due to the delay in executing the board’s mandate, the bank sought the president’s intervention, stating, “As a bank, we have done all we can to maintain the nation’s confidence in the financial industry. Without this effort, the country would have experienced significant damage to its financial sector. We have made significant strides to ensure sustained operations and seek your intervention to ensure these gains are not eroded.”

The board of governors of the Central Bank of Liberia (CBL) passed a resolution on 17 May 2024 authorising the payment of US$8 million. Despite this, customers are reportedly still finding it difficult to withdraw their money.

A pro-democracy movement, The Green Revolution of Liberia has expressed concern over “numerous complaints in the public regarding staggered payment of withdrawals, which points to a liquidity crisis at your bank.” The group stated, “We were confronted a fortnight ago by citizens experiencing difficulties withdrawing from your bank. Consequently, we conducted an inquiry into the insolvency issue, which revealed documents indicating a bailout of US$8 million.”

However, SIB Liberia Limited is not the only bank going through challenges in that country, the coffers of the  International Bank Liberia Limited is also reportedly drying out.

The financial turmoil has not only caused panic among customers but has also attracted attention from government officials and financial experts.

There is growing pressure on the Central Bank of Liberia to take more decisive action to prevent a potential banking collapse that could have far-reaching consequences for the country’s economy.

As the situation develops, many are looking to the central bank for leadership and solutions that can restore confidence in the banking sector.

The future of SIB Liberia Limited and IBLL remains uncertain, and their ability to recover will likely depend on the effectiveness of the measures implemented by the central bank of Liberia and other stakeholders in the financial industry.

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