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A Leading member of the New Patriotic Party (NPP), Gabby Otchere-Darko, has given insight into the massive banking sector clean-up that left many astonished and downhearted.

He described the hapless exercise as “very painful”, adding that “even those who took the exercise, it was painful for them.”

Banking Tsunami

In a bid to restore confidence in the banking and specialized deposit-taking sector, the Bank of Ghana embarked on a clean-up exercise in August 2017.

Spending over GH¢20 billion, the Central Bank’s action was to resolve insolvent financial institutions whose continued existence posed risks to the interest of depositors.

Finance Minister, Ofori-Atta supervised the banking sector clean-up from mid-2017 to January 2020.

The clean-up saw a reduction in the number of banks from 34 to 23, whilst 347 microfinance institutions, 15 savings and loans and eight finance houses had their licences revoked.

While some of the commercial banks were merged to form the Consolidated Bank Ghana Limited, state-owned GCB was allowed to swallow others.

The Securities and Exchange Commission also announced the revocation of the licenses of 53 Fund Management Companies.

A number of these institutions were found to have varying degrees of corporate governance lapses.

The total estimated cost of the state’s fiscal intervention, excluding interest payments, from 2017 to 2019 was pegged at GH¢16.4 billion.

Why it was necessary?

Speaking to Bola RAY on Starr Chat, Gabby Otchere-Darko said “By 2016, the government then [NDC government] had passed a law which was part of the IMF conditionalities, so this government inherited a situation which was backed by the new law.”

“Because whoever would have won the elections in 2017, by that law passed in 2016 would have had no room but to implement the same thing in the banking sector. They knew it. It was painful.” he lamented.

Pains in Akufo-Addo's eyes

Mr Gabby Otchere-Darko further said President Nana Addo Dankwa Akufo-Addo was not in support of the banking clean-up but could not have changed the situation.

“I got to see the president [Akufo-Addo] after, and I could see the pain, I could feel it. It was a painful exercise to protect depositors,” he narrated.