Bank of Ghana to save the savings and loans industry with GHC7 billion
- The central bank is set to use an amount of GHC7 billion to save distressed savings and loans companies
- The module to use, whether assumption of assets and liabilities or a consolidation, is however yet to be determined
- The decision to salvage the industry is likely to start before the year 2019 ends
The Bank of Ghana (BoG) is set to spend an amount of GHC7 billion on savings and loans companies in the country.
The decision by the central bank to support savings and loans companies with an amount of GHC7 billion is because most of them are facing challenges, a situation that places deposits of customers at risk.
The governor of the BoG, Dr. Ernest Addison, has indicated that the amount required is equivalent to the value of the assets and liabilities of the distressed businesses.
Source: UGC
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He however stopped short of stating the time to start the strategy to be adopted by the central bank, with regard to the situation.
Per a report by Dailygraphic.com.gh, it could start before the year 2019 ends, but the central bank is yet to determine the module to adopt.
The BoG will adopt either a purchase and assumption agreement, by which strong savings and loans companies will take up selected assets and liabilities of the insolvent ones, or a consolidation of all the insolvent ones into a new savings and loans entity.
The module to adopt, according to Dr Addison, was part of the ongoing discussions between the central bank and the ministry of finance to iron out the best module to save the sector that was almost in distress.
The government spent almost GH¢12 billion in the year 2018, to liquidate seven distressed banks and the cost of cleaning up the savings and loans companies and other finance houses was becoming a burden to the government.
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Source: YEN.com.gh
