EOCO to prosecute those responsible for banking failures

The Bank of Ghana (BoG) has forwarded some dossiers to the Economic and Organised Crime Office (EOCO) and other security agencies to start the prosecution of those found complicit in the recent banking failures.

It said civil action had already been taken by the Receivers and Official Administrators of the consolidated banks against the wrongdoers while a number of administrative actions were being taken by the BoG as part of the cleaning-up of the banking sector.

The BoG said the action it took to liquidate non-performing banks and those involved in regulatory infractions saved about GHC 11 billion depositors’ funds and 3,500 jobs, noting that it aimed at ensuring that the financial eco-system is sound, stable, resilient and robust to support the country’s economic growth.

The Bank’s next clean-up action would be a serious scrutiny of savings and loans companies, financial houses, micro-financial institutions, community and rural banks and announced that some of them would be shut down for various breaches.

It said it was doing everything possible to take out the distressed institutions that are not able to recover from the financial system and make sure depositors’ funds are safe, while the rest of the financial system grow stronger.

Mrs Elsie Awadzi, the Second Deputy Governor of the BoG, who announced this during a panel discussion at a financial services forum organised by the Joy FM in Accra, on Thursday, said the move was to ensure that “people would know there is a high price to pay for taking people’s money and abusing the trust they posed in you”.

“Now the banking sector is stronger than ever with profit going up, with the total asset going up, doing more lending, seeing non-performing loans drop and the industry is much stronger than ever,” Mrs Awadzi assured.

She said the capital adequacy ratio, which is the measure of banks’ solvency, has gone up by an average of 19 per cent compared to the minimum requirement of 10 per cent.

The forum attracted bankers, financial experts and key stakeholders in the financial sector to discuss the financial outlook after the collapse of seven banks within a period of 12 months and chart the way forward.

It was held under the theme: “The Changing Tide of Ghana’s Financial Services Sector; The Cause, the Cost and the Clean-up”.

Other members on the panel included Mr Charles Adu Boahen, a Deputy Minister of Finance and Mr Alhassan Andani, President of the Ghana Association of Bankers.

The Deputy Governor said the Bank anticipated exciting times and opportunities ahead when the clean-up of the banking sector is completed, noting that it was prudent for banks to position themselves well by having capital buffers or cushions of their own capital so that they could absorb the risks from the wider economy.

“When the clean-up is completed it would ensure strong financial safety net and well-behaved banks and build confidence in the financial sector again.

“We’ll then build trust in the financial eco-system because trust was affected and it’s coming back and so we’re working on that and counting on all stakeholders to lend a hand in that effort,” she urged.

Mrs Awadzi said the Bank has increased its public education and sensitization drive and assured that it was committed to enforcing its governing rules and regulations to the letter because those regulatory breaches were at the centre of the recent financial crisis.

The Deputy Governor said it has put in place stringent capital verification process to ensure that it could verify banks that would present Interim Payment Certificates indicating they had capital with other institutions.

It was refreshing that the exercise enabled depositors to have access to their funds, saying the BoG did not rejoice in closing down banks but rather to protect depositors’ funds and strengthen the financial system to support economic growth, she said.

Mrs Awadzi urged the new Receivers and Official Administration of the liquidated banks to begin a process to recover the monies taken out by borrowers, shareholders, bank directors and anyone complicit in the collapse of the banks.

This, she said, would enable the BoG to recoup the taxpayers’ funds it had given to the Ghana Consolidated Bank.

She said some of the non-banking institutions were failing to pay-up depositors’ funds and advised banks that could not meet the BoG’s minimum capital requirement of GHC 400 million to either merge with others or face imminent closure after the deadline of December 31, elapses.

According to the BoG, it closed seven banks for various regulatory and governance infractions in order to prevent the breaches from spreading to other sectors of the financial eco-system.

It said out of the 30 universal banks in the country, 20 of them have achieved the minimum capital requirement and gave the assurance that the BoG would continue the recovery process to strengthen the financial system.