President Nana Akufo-Addo has emphatically stated poorly managed local banks cannot expect government support following the collapse of seven banks.
The President expressed frustration while interacting with the Ghanaian community in Rwanda that after pumping ¢8bn of taxpayer's money into these banks, its poor liquidity challenges still persisted.
From August 2017 to August 2018, seven banks The Beige Bank, uniBank, UT, Capital, Sovereign, Construction and Royal banks have had their licenses withdrawn.
The Bank of Ghana pumped more than ¢2billion to support uniBank founded by a former governor of the Bank of Ghana, Dr. Kwabena Duffour.
Capital bank also received ¢610m bail-out money from the Bank of Ghana. But of this amount, ¢195m ended up being used to set up the Sovereign Bank. Both banks have now collapsed.
Bankrolled by the government, a new indigenous bank, the Consolidated Bank of Ghana has taken over the assets and liabilities of The Beige Bank, uniBank, Sovereign, Construction and Royal banks.
Before this, GCB took over the assets and liabilities of UT and Capital banks.
Retrenchment figures are expected to hit 2,700 by September 2018 as GCB has laid off up to 1,000 former UT, Capital banks while CBG is expected to sack 1,700.
Government has been criticized in some quarters for failing to support local banks.
Breaking his silence on the bank crisis, the President said local banks play a very important role in the banking sector.
"We cannot have a situation where dominant banks on the country are all foreign banks. It is very dangerous for our future".
But he would prefer one "much stronger" indigenous bank in addition to GCB than seven "inefficient poorly managed" indigenous ones. He said the CBG will provide the indigenous leadership needed.
"If our own indigenous banks are performing poorly…at the end of the day, if we don’t take care that is what will happen [ collapse]", he said. The President stressed local banks are not above the "rigorous" law of free market economics which rewards efficiency.
"The law of the market will have it that, if you are not performing efficiently you will go under."
The country now has 31 banks serving its estimated 27 million population.