Banking sector cleanup was necessary, it saved deposits of over 4.5m customers – Ofori-Atta

Finance Minister-designate Ken Ofori Atta has said that the banking sector cleanup was a good initiate that happened to the country.

He said the deposits of over 4.5 million customers of the various banks and other financial institutions were protected following the exercise.

Again, he said, the exercise strengthened the banks existing banks, a situation he said is good for the local economy.

Mr Ofori-Atta said these during his vetting by the Appointments Committee of Parliament on Thursday, March 25.

“We think we have done the best that the country deserves and the results show that,” he said.

He added, “We have a much stronger banking sector now than we had in 2017.”

Asked how much was spent on the exercise, he stated that an amount of 21billion cedis was spent.

Scores of industry players noted that the exercise undertaken was necessary because it strengthened the banks.

The Second Deputy Governor of the Bank of Ghana, Elsie Addo Awadzi, gave a firm assurance that the banking sector is safe, sound and has the required absorbers to withstand the expected shocks associated with the second Covid-19 wave.

Giving this assurance at the Virtual UPSA Quarterly Banking Roundtable, she said the reforms undertaken so far have brought stability in the banking industry.

She added, “we are confident about the sector’s resilience to withstand this challenge.”

Mr Vish Ashiagbor, Country Senior Partner, at PricewaterhouseCoopers (PwC) Ghana, said the cleanup exercise that was carried out in the banking sector by the Bank of Ghana (BoG) between 2017 and 2019 inadvertently prepared the banks that survived for the coronavirus pandemic and its effect on the economy.

He said on the Business Focus programme hosted by Alfred Ocansey on TV 3 Monday, May 18, 2020, that currently, the banks are much stronger and in a better position to deal with the enormous impact of the COVID-19 on the economy than they would have been before the recapitalization was carried out by the central bank.

The clean-up of the banking sector led to the collapse of seven indigenous banks.

Mr Vish Ashiagbor said: “The restructuring that took place between 2017 and 2019 has actually put the whole sector in a much stronger position to face this pandemic.

“There was recapitalization, there was a new regulation that came into place for the central bank to strengthen oversight regulation, the weaker banks were taken out of the system. So the whole chain is much stronger now.

“I think that mush as [COVID-19] is a significant threat to the whole sector the banks are in a much stronger position to deal with this as it would be two or three years ago.”

He also said banks savings and other investments are safe at the moment in spite of the impact of the coronavirus outbreak.

“Today the money is safe. I say today because obviously, it is a dynamic situation,” he said,

He added that: “Before the full impact of COVID-19 has been felt, if you go back to March and you look at the Bank of Ghana report for the banking sector for March this year, the capital adequacy of the industry was running at 20%, the regulatory treasury is 13 %.

‘What that means is that there is enough buffer to take some shocks. That is why I am saying that today the money is safe.”