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Group petitions parliament over collapse of banks

A Civil Society Group, New Era Africa (NERA) has petitioned parliament to conduct a bi-partisan public enquiry into the recent banking crisis.

According to NERA, the cost of seven defunct banks in the past one year will be borne by people of Ghana, hence it will prudent for the people’s representative to probe the issues that led to the collapse of the banks.

Reports suggest that the seven collapsed banks could cost close to 10 billion cedis.

The petition signed by the president of NERA, Bernard Owusu-Mensa stated that the enquiry could help avert acts that may lead to collapse of banks in the future.

“We are confident that when the House resumes, this will be a top priority and we expect that the committee that will be formed will do a comprehensive public enquiry covering all actors involved”. It said.

Read full petition below;

The Speaker

Parliament of the Republic of Ghana

Parliament House


Dear Professor Mike Ocquaye,


I write on behalf of New Era Africa (hereafter called NERA) to petition your high office to constitute a bi-partisan committee (preferably involving members of the Finance and Constitutional, Legal and Parliamentary Affairs) of Parliament to conduct investigations into the recent banking crisis which has caused several indigenous banks to collapse. NERA is a registered non-partisan Civil Society Organisation championing ethical leadership (entrepreneurship and governance) in Ghana and Africa. The matter of the bank crisis is of serious concern to us not only because it is costing the taxpayer so much, but also because it bothers on ethics or the lack thereof in offices of trust and responsibility.


On the 8th of August 2017, the Governor of the Bank of Ghana announced the approval of the purchase and assumption transaction agreement with GCB Bank Limited that transferred deposits and selected assets of UT Bank and Capital Bank to GCB Bank as a result of insolvency and illiquidity of the two defunct commercial banks. Parliament subsequently gave approval for the Minister of Finance to raise GHC 2.2 billion to resolve the issues related to the collapse of these banks.

Barely a year afterwards, specifically on the 1st of August 2018, the Governor of Bank of Ghana again announced the collapse of five indigenous banks namely Construction Bank, Sovereign Bank, Beige Bank, UniBank and Royal Bank. A new bank called Consolidated Bank Ghana Limited was incorporated and selected assets and liabilities of the above-named five banks transferred to the new entity. This new entity is a 100% state-owned bank and it has been capitalized with GHC 450 million while and additional GHC 5.76 billion is to be raised through a bond to resolve issues related to these now defunct banks.

The causes of this crisis are several. But recent revelations from a report commissioned by the Bank of Ghana indicating malpractice on the part of some of the executives of the collapsed banks is a matter of serious concern. The report shows how certain individuals misused liquidity support from the Central Bank, misdirected loans, used depositors’ funds for unauthorized transactions, set up banks with licenses acquired through dubious means etc. These point to total breakdown of corporate governance systems, poor supervision by the Central Bank, total disregard for ethical conduct and in some cases possible criminality.

It is in this regard that we petition your high office to cause a Parliamentary enquiry into these matters of interest to the Ghanaian public. We are aware that the Economic and Organised Crimes Office (EOCO) is already looking into some of these issues. But looking at the enormity of the matter and the fact that EOCO appears to be quite sluggish while the public sit on an edge, an urgent Parliamentary enquiry will not only bring normalcy in the financial sector but inspire confidence in the Ghanaian public. We further request that this enquiry be conducted through public hearings so that Ghanaians can follow proceedings from start to finish.

Possible effects of crisis

Loss of confidence in the banking system

The banking system and the financial industry, in general, thrive on trust and confidence. Undoubtedly, the recent revelations appear to show an abuse of the public trust given how depositors’ funds are reported to have been mismanaged and misdirected. This will go a long way to affect public confidence in banks and the financial system in general, hence negatively affecting the nation’s efforts at advancing financial inclusion.

National security implications

Following from lack of trust in the financial system, people are likely to revert to old ways of saving their money including keeping them under pillows. This will send signals to robbers and other criminals thereby escalating residential armed robbery. This poses serious national security risks to lives and properties.

Potential job losses

The bank crisis has caused much trepidation about job losses, which are likely to worsen in the coming months, compounding the unemployment situation in the country. Indeed some former workers of the defunct UT and Capital Banks are reported to have lost their jobs already, as a result of which some have died or lost their loved ones. Only last week, the newly incorporated Consolidated Bank Ghana issued notices to former workers of the five banks who are now staff of the new bank, informing them about new human resource measures (possible repositioning and realignment of roles) that will obviously lead to job cuts.

Increase in public debt

The total amount of public funds that will be expended on resolving the bank crisis is GHC 8.41 billion, not counting GHC 1.4 billion given earlier in liquidity support. This reverses the gains made in reducing debt to GDP ratio. Rating agency Moody’s has projected that this banking crisis will push Ghana’s debt to GDP ratio to 72.4% making the country one of the highly indebted middle-income countries.

Need for a public hearing

There are many reasons why a public hearing is needed, including but not limited to the following;

Public funds used to bail out the banks means the matter is of great public interest. As noted above, so far, public funds spent or earmarked to mitigate the effects of the crisis is GHC 10 billion. As representative of the people, with supervisory oversight over the public purse, it is only fair and proper that Members of Parliament investigate the real issues leading to the crisis and on that basis collaborate with State agencies to take both corrective and preventive steps to bring things to normalcy. A public enquiry will send positive signals about transparency in governance, especially as regards the people’s money.

Opportunity cost

The huge amount involved could have been used to do so many things for the people of Ghana. Take for example the issue ambulances in the country. Reports indicate that with a population of 29 million, Ghana has only 55 ambulances putting the ambulance – citizen ratio at 1 ambulance to 527,272 citizens. GHC 8.41 billion could have procured 16, 820, which would have improved the ratio to 1 ambulance to 1,718 citizens and remarkably changed emergency response in the health sector. If the people are missing this, they should at least know that something is going to be done about the mess and should be able to follow the process from start to finish. The Education Minister in his Press encounter last week said a total of 1.07 billion cedis is needed to meet infrastructural gap in the Secondary schools. Here we are sinking over 8.41 billion in less than a year to clean a “man-made” crisis.

Engendering public confidence

There is the need to restore public confidence in the banking system. And as they say, sunshine is the best disinfectant. Opening it up to the public will clear all doubts and save the banking system from imminent collapse.

Learning from best practices

Issues of this nature have happened in many countries before. In majority of these countries, the legislative arm always tried as much as possible to take initiative to enquire into the matter and in some cases crafted the necessary legal architecture to avert future crisis. We believe this Parliament stands a great chance to show to the world it is of age and indeed ready to deliver quality service in the interest of the people.


We are confident that when the House resumes, this will be a top priority and we expect that the committee that will be formed will do a comprehensive public enquiry covering all actors involved. In particular, based on the BoG report, the following are some of the current and former officers who will need to answer some questions;

Internal and external auditors of the seven banks involved Seth Terkper, Former Minister of Finance Kofi Wampah, Former Bank of Ghana Governor Issahaku Nashiru, Former Bank of Ghana Governors Former Managing Directors and Board Chairpersons of the seven defunct banks Ken Ofori-Atta, Current Finance Minister Ernest Addison, Current Bank of Ghana Governor Former Head the Banking Supervision Department of the Bank of Ghana Managing Director, Ghana Stock Exchange and any other person the Committee will deem important

For the benefit of the country!


Bernard Owusu-Mensa



Majority Leader of Parliament

Minority Leader of Parliament


Source: citibusinessnews.com

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