Indigenous Banks Were Not Intentionally Collapsed — Bawumia Rubbishes Claims

Vice President Dr. Mahamadu Bawumia has denied claims by the opposition National Democratic Congress (NDC) that the governing New Patriotic Party intentionally closed down some nine indigenous banks during the financial sector clean-up.

As part of the banking sector clean-up, the Bank of Ghana (BoG) revoked the licences of nine universal banks, 347 microfinance companies of which 155 had already ceased operations, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.

Some critics including the NDC accused the NDC of witch-hunt in the collapse of some of the banks.

But speaking at the government’s town hall meeting at Kumasi on Tuesday, Dr Bawumia insisted that the indigenous banks were collapsed because they were involved in fraudulent activities.

“They [the NDC] are telling the people of Ghana that they would have kept the indigenous institutions alive even after they had found that they had obtained their licenses in some cases based on false and non-existent capital or after it became obvious that they have siphoned off depositors’ funds and the liquidity support that the Bank of Ghana had provided those institutions. Is their idea of an indigenous financial sector one that is characterized by fraud or unlawful activities?” he questioned.

“A lot of these banks were engaged in fraudulent practices and poor corporate governance and therefore the Bank of Ghana had to take action against them. We cannot say simply because you are indigenous banks, we should allow you to collapse the entire banking system. Nobody takes any pleasure in revoking the license of any institution. It is important to note that all the nine indigenous banks that were closed were to a large extent taken over by two Ghanaian indigenous banks; GBC and CBG. So we are ensuring stronger Ghanaian ownership in the banking sector. Let us note that no bank was closed only on account of not meeting the minimum capital requirement of GHS400million. There were other matters that resulted in the closure.” Collapse of indigenous banks

On August 14, 2017, the BoG in its press statement announced its approval for the takeover of two indigenous banks, UT Bank and Capital Bank by the Ghana Commercial Bank (GCB).

BoG cited the insolvency of the banks in question, as the major reason for the revocation of their operating licenses.

Consequently, to protect customers, the licenses of the banks were revoked under a Purchase and […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.

Leave a Reply