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Member of Parliament for Bolgatanga and member of the finance committee of Parliament, Isaac Adongo, has observed the banking sector risks collapsing because of what he describes as hostility by regulatory authorities.
Mr. Adongo is worried that if industry players do not stand up, the “hostilities” will eventually lead to the collapse of the entire financial sector. .
“Ghana’s financial system is on the verge of collapse and we need to rise up and speak the truth and speak up”, he said on 3FM’s Sunrise morning show.
The truth, Mr. Adongo said, “is that the banking sector is under threat. The banking sector and the regulatory sector is under siege by regulatory hostility”.
The Bank of Ghana on Wednesday, August 1, announced the revocations of the licences of Beige Bank, Construction Bank, the Royal Bank, Sovereign Bank and uniBank, and the establishment of the Consolidated Bank Ghana Limited to take over the assets of the banks.
But Mr. Adongo says he is not surprised with the development.
He observed the appointment of KPMG as administrators of uniBank in March was “administration leading to liquidation” and appointment of advisors for the other banks was in the same light.
The Bolgatanga Central MP was however surprised “to the effect the Bank of Ghana has been doing the same wrong things and expecting different results”.
The wrong things Mr. Adongo said were the deliberate attempts by regulatory authorities in the country to frustrate the banking sector.
He explained that prior to the collapse of the five banks, the Securities and Exchange Commission (SEC) directed fund management companies, who he claims have invested about 30.7 billion in local banks, to within six months withdraw all their investments from the banks.
He said the companies obliged.
According to the member of the finance committee of Parliament, the directive did not intend to help the banks in any way but rather to wipe the out.
“The directive by the Securities and Exchange Commission is an unfortunate collaboration with the Bank of Ghana that has only one end result, which is to collapse those that are holding significant amounts of these fund management assets”, he said.
“What I am surprised at is the regulatory hostility and intentional regulatory directive that have the tendency to deplete the banking sector of GH¢30.7 billion and yet expect that the banking sector will be strong”, he added.
The Bolgatanga MP observed it is particularly worrying that the governor of the central bank, Ernest Addison, in the presence of the Vice President, Mahamudu Bawumia outdoored Beige Bank only for it to go down in seven months.
According to him, the directive by SEC saw Beige Bank part with GH¢1.5 billion of GH¢2 billion of funds they were managing for some fund management companies.
He wondered how the Bank of Ghana expected Beige bank to remain solvent with such huge loss in investment. He added a lot of banks suffered the same fate.
For him, it only shows “the level of systemic risk that our banking sector and our financial sector as a whole are facing and it is as a result of which we are likely to see a shutdown of the financial system of this country”.
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