President Nana Addo Dankwa Akufo-Addo has said he supports the decision by the Bank of Ghana (BoG) to intervene, the way it did, in the banking sector to save it from total collapse.
The Bank of Ghana in August 2017, revoked the licences of UT Bank and Capital Bank, and were subsequently taken over by GCB Bank, after having been declared "irredeemably insolvent".
Also, the recently-established Consolidated Bank Ghana Limited was morphed by fusing uniBank, The Construction Bank, The Royal Bank, The Beige Bank and Sovereign Bank together.
The collapse of these banks has led to thousands of job losses in the country.
Speaking at a dinner held in his honour at the residence of Ghana’s Ambassador to the U.S.A. on Sunday, 23 September 2018, Nana Akufo-Addo said although such reforms are unpopular, it was necessary to protect the banking system.
“We’ve had to take some very difficult decisions regarding our financial sector – that is the banks. Unfortunately, indigenous banks that have had very major challenges of liquidity, insolvency, bad governance that have jeopardised the deposits of thousands of innocent depositors, the Bank of Ghana was forced to take some difficult, but in my view, totally essential measures to protect the banking system, to protect the depositors and to make sure that the process of consolidation in the banks we require in Ghana, is effective,” he stated.
Citing the Nigerian example, Nana Akufo-Addo said: “I know it’s a difficult period, periods of reform are always difficult to accommodate, but some basic facts are worth bearing in mind. Ten years ago, Nigeria had 89 banks, many of them had vehemently the same challenges as our banks have had. Today, as a result of the reforms that were taken, led by the Central Bank of Nigeria, they have 25 [banks] and those 25 are now amongst the strongest banks capable of competing with the foreign banks in Ghana, Nigeria and even Africa. Access, UBA, Zenith are now some of the leading pan-African banks who are competing very successfully with the foreign banks on the continent.”
Like Nigeria, Nana Akufo-Addo said: “We want to have that in Ghana, we want to be able to have Ghanaian banks that are strong enough not just to work in Ghana, but to work throughout West Africa and be in a position to compete with other banks.
“The present capitalisation, methods of work, cooperate practice of the works in Ghana were not permitting that; and that is the reason for the steps that have been taken. Those steps, I have no doubt, will, at the end of the day, result in a stronger banking sector. We’ll have, perhaps, fewer banks amongst indigenous banks, but stronger ones, and, therefore, be in a position to facilitate the financing of our development in a much more coherent manner.
“But as I said, periods of reforms are always difficult and, therefore, you’ll get all kinds of reactions but we’re staying focused and steady, recognising that it was not just that the Bank of Ghana would just fold up its arms and watch all these banks crush one after the other, and that, it was necessary to take these intervention steps to protect the financial system of our country.
“As events turn out, we’ll see the validity and strength of the decisions that the Bank of Ghana has had to take and those decisions have had the full support of the Ministry of Finance and of the government of Ghana and I have no doubt they were the correct decisions that had to be taken for the banking sector and for the country”.