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Banking sector clean-up was necessary, not politically motivated - Financial analyst

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Thu, 6 Oct 2022 Source: www.ghanaweb.com

Financial analyst, Dr. Micheal Dawson, has reiterated that the banking sector clean-up exercise was a necessary action taken by the central bank.

According to him, some suggestions made that the exercise was politically motivated are rather unfortunate.

He explained that the clean-up exercise was intended to save millions of depositors funds despite liquidity support offered to some banks at the time.

"I don't think we still have to argue over whether the exercise was politically motivated because I don't think that was the case at all. Millions of customers' funds were in peril and banks were facing near distress. This would have significantly affected the entire banking sector if the exercise was not undertaken."

"What the central bank did was rather commendable in raising the red flags of certain actions by directors of now insolvent banks who at times could not account for some of their depositors' funds," Dr Dawson explained.

The economist said this in reaction to remarks made by former UT Bank boss, Prince Kofi Amoabeng, who suggested that the defunct Heritage Bank was politically targeted by the central bank.

But according to the BoG, Heritage Bank among other things obtained its banking licence on October 4, 2016 on the basis of capital with questionable sources.

Furthermore, the bank was unable to meet the new minimum capital requirement of GH¢400 million as of December 31, 2018.

As part of its efforts to clean-up the banking sector, the Bank of Ghana examined the affairs of a number of banks which included Heritage Bank Limited and discovered a number of anomalies relating to its licensing, the sources of its capital, and related party transactions.

The central bank, however, determined, pursuant to sections 9 and 12 of Act 930, the majority shareholder of the bank, Mr. Seidu Agongo, did not meet the “fit and proper person” test.

This led to the revocation of the bank's operating license under section 16 (1) (a) (7) and (8) of Act 930 of the Central Bank.

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Source: www.ghanaweb.com
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