Government justifies ¢12.7bn of taxpayers’ cash spent on 7 collapsed banks

Government says it has spent a whopping 12.7 billion cedis of taxpayer’s on the seven collapsed indigenous banks in the country within the last one year.

The decision, President Nana Akufo-Addo justified, stating the huge amount injected into those banks has safeguarded depositors money and minimised job losses.

He said he is committed to having two performing indigenous banks in the country than to have seven weak ones, noting recent examples of Nigeria, Malaysia and others have shown.

The President said this Saturday when joined the management and students of the Presbyterian Boys’ Senior High School at Legon, Accra, to celebrate the school’s 80th Anniversary.

“To protect the deposits of the seven defunct banks, the Government, through the Ministry of Finance, has had to issue bonds to the tune of some GH¢8 billion in favour of GCB Bank and the new Consolidated Bank, the banks that took over the operations of the seven failed banks,” he said.

He added that the amount is in addition to liquidity support of some GH¢4.7 billion that had been provided by the Bank of Ghana to these banks over a period before their closure.

Nana Akufo-Addo assured that persons whose action and inactions resulted in the financial mess that has caused over 2,000 job losses in the sector within a year would be made to face the full brunt of the law.

“It is not right that the overwhelming majority of ordinary Ghanaians should pay for the actions of a greedy few, without sanction.”

Seven indigenous banks have collapsed in the last year after the Bank of Ghana revoked their licence for being highly insolvent among others.

While the Ghana Commercial Bank took over the good assets of UT and Capital banks which collapsed in August 2017, five others whose collapsed were announced by BoG on August 1, 2018 have been consolidated to form the Consolidated Bank Ghana Limited.

They are Royal, Construction, Beige, UniBank and Sovereign banks.

The Bank of Ghana has since mid-August assured the public that its officials and persons responsible for the collapse of the banks will face punitive sanctions and prosecution.

It served notice it will not shield its staff and persons in the industry who contributed to the financial mess as it sought to introduce stringent accountability and integrity measures in the country’s financial sector.

“Persons whose actions contributed to the collapse of the 7 banks will not be shielded, but will be made to face the full rigour of the relevant laws of Ghana,” a statement issued by BoG on August 15 assured.

President Nana Akufo-Addo said the mess required robust intervention of the regulatory bodies to prevent the infection of the banking sector with these acts.

He said it was on the basis of this that the government through the central bank took the action it has so far carried out.

“I have no doubt that, if these measures had not been taken, the banking system would have been seriously compromised, with dire consequences for depositors and their savings. We need urgently a vibrant banking sector that can help mobilise resources to finance our industrial, agricultural and economic transformation,” he added.