Second Deputy Governor of the Bank of Ghana, Mrs. Elsie Addo Awadzi, has said that the bank’s intervention on collapsing and merging the seven defunct banks to form the Consolidated Bank Ghana Ltd saved some 3,500 jobs.
Some have called the central bank’s decision to collapse and merge the seven defunct banks ill-timed and disastrous, as it has led to some 1,500 job losses.
But speaking at the Joy FM Financial Sector Forum held in Accra, Mrs. Awadzi justified the central bank’s decision, saying it rather minimized the job losses by 70 percent, which otherwise would have been lost if the action was not promptly taken.
“BoG’s actions against the failed banks and Government’s decision to guarantee the deposits of the seven banks and the creation of CBG have helped to mitigate what could have been severe adverse consequences from these failures. When banks fail, there are usually a lot of casualties which, if not well managed, could lead to significant problems for the financial sector and the economy."
"The interventions of the BoG and Ministry of Finance (MoF) minimized job losses by saving some 3,500 or 70% of approximately 5000 employees of the defunct banks,” she said.
She added that the banking sector reforms have boosted the confidence of local and international investors and other market players, and have contributed to the recent upgrades of Ghana’s credit rating by Standards and Poors (S&P) to B- to B.
Also addressing why there was the need to take such strong action against the banks, Mrs. Awadzi said the banks posed significant risk to the economy and had to be helped to exit the market in an orderly fashion, especially, considering the extent of distress they were in.
Going forward, the BoG will continue to strengthen its supervisory and regulatory role to ensure such a situation does not repeat itself.
“On our part, we are strengthening our regulatory and supervisory capacity through improved systems, processes, accountability, and training, to enable our supervision staff better monitor banks’ performance and conduct, and ensure that banks take prompt corrective action to address emerging risks.
We are working with all stakeholders to rebuild confidence in our banking sector. There are great opportunities ahead for the industry to drive Ghana’s economic growth agenda, and we expect to see banks positioning themselves for these opportunities,” she said.