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Government had ¢20bn plan to avert 'needless' bank collapse -Terkper
Former Finance Minister Seth Terkper has said steps taken by the Bank of Ghana that led to the collapse of seven banks could have been avoided.
He said the defunct banks could have been saved if a workable strategy put in place had been properly applied.
This strategy he said was designed by the NDC government under Mahama and bequeathed to the NPP. But the plan was ignored, he suggested in an interview on Joy FM's Super Morning Show Tuesday.
Seven banks have collapsed since the NPP government came into office in January 2017. UT, Capital banks bit the dust in August 2017. They were followed by uniBank, The Beige Bank, Construction, Royal and Sovereign banks in August 2018.
UT and Capital banks were taken over by GCB while the rest was rolled into a newly created bank, Consolidated Bank of Ghana.
The BoG explained although it had pumped monies into banks like UT, Capital and uniBanks, they still struggled to remain viable.
The struggles of these banks have been traced to the failings of the era of President Mahama where Dr. Henry Wampah and Dr. Abdul-Nashiru Issahaku were governors of the central bank while Seth Terkper was Finance minister.
The main reason for ESLA was to help the banks, the former Finance minister stressed. If government had extended, it meant it was getting huge funds which could have saved the banks, Seth Terkper indicated.
He calculated that government will collect ¢20bn from the extended ESLA because it brings in an average of ¢2bn annually.
"Why were they not used to address some of these problems"?, he asked. The Akufo-Addo government announced it will issue ¢5.7bn bond to support Consolidated Bank of Ghana which took over some of the assets of five of the collapsed banks.
He said the Mahama government had bequeathed to the Akufo-Addo government an ESLA strategy which could be used to save the banks.
The former minister admitted the problems which some of the defunct banks faced were not just liquidity issues. "Those issues have to be addressed but the question is what do you do to protect the banks?".
Seth Terkper suggested the other issues faced by the banks cannot be "sufficient reason for not taking action for the entire 2017 when money was sitting there."
The collapse has led to severe job losses.
Some banks in the US in the past faced similar problems as those in Ghana but governments under Bill Clinton and George Bush took steps to save these banks, he said.