- Following the collapse of UT and Capital Banks, the finance ministry has urged the BoG to keep a close eye on distressed banks
- In Ghana a bank needs ¢60million to operate
- Vice president, Dr Bawumia is on record to have warned that some banks are likely to folod up two years ago
Vice President of Ghana, Dr. Mahamudu Bawumia cautioned banks in the country over hikes in bad loans, and predicted the collapse of eight banks two years ago.
According to him, the “asset quality review of banks, conducted in 2015 shows significant vulnerability of banks to current economic conditions”, putting majority of them on brink of collapse.
Delivering a speech in 2015 on the state of Ghana’s economy, Dr. Bawumia said: “In fact eight banks were identified to exhibit significant weaknesses with capital adequacy ratios of below 10 percent and some below 5 percent and nearing collapse so it is a real problem.”
Dr. Bawumia who once served as the Deputy Governor of the Bank of Ghana, further lamented the state of some banks in the country, insisting majority of them had weak foundations.
In his view, banks must begin to address issues of debt or risk falling out of business and eventually collapsing.
This, he said, would be a threat to the banking system, especially when debtors refuse to pay for loans acquired.
“I am very worried and concerned because of the former position i held and this BDC issue is a major threat to the banking system and it should be addressed or a number of banks will collapse because of the debt,” he warned.
The comments by the vice president two years ago seem to have manifested, with UT Bank and Capital Bank being taken over by GCB Bank, after the licenses of the aforementioned banks were revoked by the Bank of Ghana.
The Bank of Ghana sanctioned the takeover due to financial instability on the part of UT Bank and Capital Bank.