President Nana Akufo-Addo has indicated that the action of the Bank of Ghana (BoG) to merge some struggling local banks is justified.
According to him, the “indigenous banks fell foul of the regulations of the Bank of Ghana. The BoG, with the support of the Ministry of Finance [therefore] acted [to save the situation]”.
In his view, it was a “difficult decision” but he is confident that the measures taken by the BoG “ultimately will be seen to have been the correct decision to make”.
For him, the health of the financial sector was in jeopardy and “there was no way we could just sit down and fold our arms”.
President Akufo-Addo made this known on Friday, 28 September 2018, when he addressed a townhall meeting of Ghanaians resident in Washington DC, as part of his trip to the United States of America for the 73rd Session of the United Nations General Assembly.
He said neigbouring West African country, Nigeria, had to take similar measures when there was 85 banks and the figure reduced to 23 but the surviving banks “are now amongst the important banks in Africa”.
Mr Akufo-Addo said “a two or three strong indigenous banks which can stand on their own feet, with proper capital base and proper regulatory and governance systems in place, will be a very much stronger banking sector for us and we will have a banking sector that will be able to help finance the development of our country”.
Mr Akufo-Addo said a total of GHS12 billion of taxpayers’ money, was pumped into the seven local banks which eventually went under.
The seven banks went bust within a space of one year – from August 2017 to August 2018.
They include UT Bank, Capital Bank, uniBank, Sovereign Bank, The Royal Bank, The Beige Bank and The Construction Bank.
The first two went under in August 2017.
The other five went bust two weeks shy of a year after the first two failed.
UT Bank and Capital Bank were taken over by GCB Bank while the last five were put together by the BoG to form the all-new Consolidate Bank Ghana Limited (CBG).
It is estimated that about 2,000 staff will be retrenched.