GOVERNMENT HAS been compelled to give extensive details on how it managed to save the banking industry from further collapse with sweeping measures.
This follows attempts by former President John Mahama to blame the incumbent for the recent crisis that hit the banking sector.
Speaking at the commissioning of a $5 billion affordable housing project on Wednesday at Afuaman near Amasaman in the Greater Accra Region, Vice-President Dr. Mahamudu Bawumia, a former Deputy Governor of the Bank of Ghana (BoG), said the current leadership of BoG had to act decisively to clear the mess created under the John Mahama-led administration to avert the collapse of the entire financial system.
According to him, “Several of the failed financial institutions could not pay their debts to other financial institutions and that in itself was threatening to collapse other institutions.”
As a responsible government, he indicated that “the Akufo-Addo administration continues to spend considerable amounts of money to pay off debts Mr. Mahama’s government and SOEs owe to banks that created liquidity challenges for some of these banks.”
Apart from that, he noted: “We have also supported the necessary clean-up effort and provided significant and timely relief to depositors whose deposits were at risk as a result of the demise of the defunct banks, MFIs and savings and loans companies/finance houses, totalling over GH¢13 billion.”
It was because of such issues that government set up the Consolidated Bank Ghana Limited (a wholly-owned Government of Ghana and licensed by the Bank of Ghana as a universal bank) and capitalized it with GH¢450 million to acquire the deposit liabilities of seven of the nine defunct banks so that no depositor lost their deposits.
According to him, Ghana now had stronger indigenous banks instead of the many poorly capitalized and poorly governed as well as poorly managed entities.
He said the central bank’s directive to commercial banks to increase their minimum paid-up capital to GH¢400 million by 31st December 2018 had been successful.
Also, government’s decision to provide an amount of GH¢800 million to the Ghana Amalgamated Trust (GAT) to capitalize solvent indigenous banks was progressing steadily.
He said if government had not taken such actions that would have been a real national security threat. He asked rhetorically: “Where from John Mahama’s new found care for indigenous firms? Does John Mahama know how many indigenous firms collapsed under his four years of dumsor? Why didn’t his government bail them out?”