BoG governor says collapsed banks were beyond redemption

BoG governor says collapsed banks were beyond redemption

- Dr. Ernest Addison has defended the central bank's decision to clean the financial sector in Ghana

- According to the governor, the act by the regulator will bring back confidence in the Ghanaian banking sector

- He also used the occasion to debunk allegations and assertions that the regulator’s actions were politically motivated

The Governor of the Bank of Ghana (BoG) has defended his outfit’s decision to collapse some indigenous banks, instead of giving them a bailout.

Dr. Ernest Addison said it was the right decision to revoke the licences of these banks because they were beyond redemption.

“The question on people’s minds is whether the Bank of Ghana could have used the bail-out money to keep the banks in operation. Ladies and Gentlemen, such reasoning suggests a lack of understanding of the fundamental issues at play.

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Let me say that the underlying factors that accounted for the resolution of the banks were deeper than liquidity issues,” he said at the annual working luncheon of the Ghana Association of Bankers.

Some have argued that a bailout would perhaps have been a cheaper option to the taxpayer and could have saved more jobs in the banking sector.

But, Dr. Addison maintains that the level of insolvency of the collapsed banks put them in a situation beyond redemption.

“…one can mention very serious infractions, weak governance structures and related-party transactions which rendered those defunct banks insolvent. I will not rehash these issues but rather look forward to the emergence of a stronger and well-capitalized banking sector," the governor noted.

The Central Bank over the last two and half years has revoked licenses of 7 banks, 23 savings and loans companies and 347 microfinance institutions over their insolvency.

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The move was part of a banking sector clean-up. The central bank has since spent over GH¢10 billion to protect depositors’ funds. earlier reported that the 2019 Wealth Report which is compiled by AfriAsai Bank has ranked African countries according to their wealth on the continent.

On the ranking, South Africa topped the list with its total High Net Worth Individuals (HNWI) where 39,200 people are holding most of the country’s wealth at $649 billion.

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