By Lawrence Williams
In November 2024, the International Monetary Fund (IMF) warned the government about a possible financial crisis in Sierra Leone. They said high solvency risks in the banking system could trigger a domino effect that would be difficult to control unless urgent action was taken.
In response, the country’s financial regulator, the Bank of Sierra Leone (BSL), ordered a diagnostic review of banks under its supervision. The aim was to accurately assess their asset quality and capital strength, in line with Section 69 of the Banking Act 2019. This includes enforcing banking rules and placing failing institutions into resolution where applicable.
Experience shows that banks usually end up in resolution when they become insolvent or are close to collapse. This often happens because of bad financial practices, poor lending decisions, insider dealings, weak internal controls, or a mismatch between assets and liabilities.
Shutting down a failing bank through normal bankruptcy procedures could have far-reaching implications for the public interest. It could even destabilise the financial system and disrupt essential services such as payments and savings. Resolution is therefore designed to provide an orderly way to manage a failing bank while keeping key services running and protecting depositors and taxpayers.
At the government’s request, an IMF mission in February 2025 carried out another diagnostic assessment, this time focusing on corruption risks and governance weaknesses in key macroeconomic areas, including financial sector oversight and anti-money laundering.
The IMF reported that one bank had recorded negative equity for a long period, and that discussions were ongoing on how to resolve the situation.
“There is one bank that for a long time had negative equity and discussions are ongoing on a possible resolution,” the IMF said, urging the Bank of Sierra Leone to enforce the mandatory regulatory frameworks to protect the stability of the banking system.
Central bank officials said that this situation has persisted longer than necessary. Since 2017 or thereabout, UTB was obligated to correct its negative equity position and strengthen its grossly inadequate capital base. Regrettably, they consistently failed to meet both of these requirements.
In December 2025, BSL announced the resolution of Union Trust Bank (UTB). The central bank appointed a caretaker management team to oversee the process and named Rokel Commercial Bank (RCBank) as the approved acquiring institution.
“This acquisition ensures that a strong, stable, and well-capitalised institution will assume UTB’s operations, providing continuity and long-term security for depositors,” BSL stated.
This development raises an important question: what legal authority does the Bank of Sierra Leone have to manage the takeover of a failing bank like UTB?
The answer lies clearly in the Banking Act 2019, which gives BSL strong powers to deal with weak or failing financial institutions. The law also sets out a clear legal framework for how a bank under resolution can be acquired.
When a bank is assessed as failing or lacking enough capital to operate safely, Section 69(1) allows the central bank to place it into resolution by a “Written Order.” Once this happens, BSL takes control of how the bank will be fixed, sold, or taken over. This is the situation currently facing UTB.
Under Section 71(1) of the Act, BSL has the power to restructure a bank in resolution. This includes approving mergers, transferring assets and liabilities, or selling parts of the bank, even without the consent of its shareholders or creditors.
The resolution process involves valuing the failing bank, marketing it to healthy institutions, inviting bids for the purchase of assets and assumption of deposits, and selecting the option that is least costly to the deposit insurance system. The process is designed to ensure stability and continuity.
In some jurisdictions only financially sound banks are allowed to take part in the process. These banks must meet strict requirements, including adequate capital, good governance, and regulatory compliance. And the resolution authority must also consider the public interest and the impact of the transaction on the wider financial system, to ensure the acquiring bank does not become weak after the takeover.
Several banks expressed interest in acquiring UTB. After a thorough assessment, RCBank emerged as the most responsive bidder, meeting all regulatory standards and demonstrating strong capital adequacy.
UTB is an indigenous bank. Its acquisition by RCBank, which is also an indigenous institution, after meeting all legal, financial, and regulatory requirements is a decision most welcomed by many right-thinking Sierra Leoneans. It preserves local ownership and protects the legacy of the late Dr Sanpha Koroma, rather than allowing UTB to be handed over to a foreign institution.
In stamping its authority on UTB’s resolution, the Bank of Sierra Leone is not overreaching. It is simply doing what the law requires by protecting depositors, safeguarding financial stability, and acting in the national interest.
May Rokel Commercial Bank continue to excel under Dr. Gilpin’s leadership while contributing to the stabilization of the financial sector in Sierra Leone.
