BOG

COLLAPSED S&L FIRMS: GH¢2.3 BILLION OUT OF GH¢12 BILLION IN ASSETS RECOVERED – BOG

BOG | Matilda Akakpo | November 23, 2020 | Comment off

Governor of the Bank of Ghana (BoG) has revealed an amount of GH¢2.3 billion out of GH¢12 billion in assets have been recovered by the receiver of the defunct savings and loans companies. According to Ernest Addison, all depositors of collapsed banks that became insolvent due to the clean-up exercise undertaken by the BoG have been paid. “Some of the data that I have suggests that all depositors in the banking sector have been paid their locked-up funds except for those of related parties. In terms of recoveries, approximately GH¢2.3 billion out of the stock of GH¢12 billion in assets have been recovered and we still have a long to go.” Dr Ernest Addison made this known at the central bank’s last Monetary Policy Committee press conference for the year to announce its decision on the monetary policy rate ahead of the upcoming general elections. The central bank however has maintained its policy rate at 14.5 percent for a fourth consecutive time this year owing to economic growth indicators improving and reserve buffers remaining strong. Meanwhile in August 2019, the Bank of Ghana revoked the licenses of 23 insolvent Savings and Loans companies and Finance Houses after it had earlier on in May 2019 revoked the licenses of 347 microfinance companies. These actions were part of the financial sector clean-up where some financial institutions had become distressed. The decision, according to the central bank was in line with Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the license of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent.

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UT BANK COLLAPSE: EOCO TAKES OVER KOFI AMOABENG’S MANSION

BOG | Matilda Akakpo | November 5, 2020 | Comment off

The Economic and Organised Crime Office (EOCO) has taken over a plush house of embattled former Managing Director of defunct UT Bank, Mr. Prince Kofi Amoabeng, MyNewsGh.com has confirmed. The house according to checks by this portal is located at Kukurantumi in the East Akim District of the Eastern Region. It was built 15 years ago by the businessman and former military officer. Checks by MyNewsGh.com from EOCO reveal that the latest action was taken last Friday with the explanation it is under investigation, asking the public or assignees to keep off. A notice at the entrance of the house reads “This property is under investigation by EOCO. Keep off”. Mr. Prince Kofi Amoabeng or his lawyers have declined comment on the matter but officials of EOCO, when reached by MyNewsGh.com investigations, confirmed taking over the house but declined to give further details. Background The Attorney -General (A-G) in February this year filed new charges at the Accra High Court against Prince Kofi Amoabeng, the founder of the defunct UTBank, over the collapse of the bank. The charge sheet filed at the Accra High Court named as accused persons Dr Johnson Asiama; a former 2nd Deputy Governor of the Bank of Ghana (BoG), Raymond Amanfu; a former Head of the Banking Supervision Division (BSD) of the BoG, Catherine Johnson; Head of Treasury of the UTBank, Robert Kwesi Armah; General Manager of Corporate Banking of UT Bank and UT Holdings; the parent company of UT Bank. All five have been charged by the State with forty-two (42) counts of Fraudulent Breach of Trust, Fabrication of Evidence, Deceit of Public Officer, Fraudulently Causing Financial Loss to the Republic, Contravention of the Bank of Ghana Act and Wilfully Causing Financial Loss to the Republic.

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INSOLVENT SAVINGS AND LOANS COMPANIES: GH¢6.39BN CLAIMS PAID

BOG | Matilda Akakpo | October 14, 2020 | Comment off

Out of GH¢ 6.5 billion in deposit claims validated by the receiver of the failed specialised deposit-taking institutions (SDIs), GH¢6.39 billion has been paid in cash to depositors, the Second Deputy Governor of the Bank of Ghana (BoG), Mrs. Elsie Addo Awadzi, has said. With that payment, she said, there was now an outstanding amount of GH¢110 million, being claims of related parties of the defunct institutions who played active roles in their management and control. “The clean-up of the SDIs sector was necessary. First of all, the law under which we regulate these institutions requires that we revoke their licenses when they are no longer able to honour their obligations to their customers,” she said at the BoG/SDI media sensitisation workshop in Accra yesterday. SDIs Savings and loans companies, finance houses and microfinance companies, together with rural and community banks, constitute the SDIs sector, which is regulated under the Banks and SDIs Act of 2016 (Act 930). The institutions have been licensed by the BoG to provide access to finance for segments of society that are not able to access financial services from commercial banks. The SDIs are expected to accept small deposits and provide small loans for micro/small businesses and informal sector business operators. Clean-up Following the clean up of the SDIs sector, there are 25 savings and loans companies, 15 finance/leasing companies, 137 microfinance companies and 144 rural and community banks currently operating. Mrs. Awadzi said although the BoG had revoked the licenses of 347 insolvent microfinance companies and 39 micro-credit companies on May 31, 2019, it was important to note that 155 microfinance and 10 micro-credit companies had already ceased operations and had been dormant for a number of years. On August 16, 2019, the BoG revoked the licences of 15 insolvent savings and loans companies and eight insolvent finance house companies. In order to mitigate the recurrence of mass failures in the SDIs sector, the bank had revamped its supervision of the sector and was working on new rules on corporate governance and risk management to guide operators in the sector. Critical stakeholders. According to Mrs Awadzi, that segment of the financial sector formed the bedrock of Ghana’s economic development that could be harnessed and nurtured to become strong economic actors. “Together, the SDIs sector has contributed significantly to our nation’s socio-economic development by serving individuals and micro, small and medium-size enterprises. But for the SDIs, a big vacuum would have existed in our financial system today,” she said. As of the end of July 2020, she said, the assets of SDIs constituted 8.47 per cent of total banking sector assets, and that their base and loans made up 7.70 per cent and 14.28 per cent, respectively, of the entire banking sector. “Savings and loans, finance house and microfinance companies currently operate through 1,070 branches nationwide, serving about 1.5 million individuals and businesses, offering thousands of jobs and providing loans for commerce and finance, salaried workers, transportation and communications, agriculture, forestry and fishing, small-scale construction, mining and manufacturing amounting to about GHc5.7 billion as of July 2020, with loan amounts per customer ranging from a little over GHc1,000 to GHc20,000 and beyond,” she said. Challenges Mrs. Awadzi said in spite of the achievements of the SDIs sector, it had faced challenges over the years, adding that “many of the microfinance companies that were licensed from 2012 were ‘grandfathered’ into the then new microfinance licensing regime, without the requisite due diligence done on them”. Several of them, she said, had operated for a number of years without regulation, and on being licensed, continued with business as usual, without complying with licensing requirements and other regulatory norms and without understanding that as financial institutions, they had to operate under prudent management and strong internal controls to ensure the safety of their depositors’ funds. Moreover, she said, a number of savings and loans companies and finance houses also strayed away from their mandates under the licenses issued by the BoG and tried to operate as banks, without the requisite amounts of capital or the expertise to manage the risks they were taking. Deposits “Instead of taking small deposits and lending small amounts of money per customer, they took on large deposits and made large loans and placed significant amounts of funds with other SDIs and related parties, with little or no prospect of getting back those funds. “Essentially, it is these factors — poor capitalisation, poor business models, poor governance and risk management and, in some cases, fraud and dishonesty — that led to many of these institutions collapsing in the last few years, starting with the famous or infamous DKM in 2016 and subsequently many more,” she said. Safety and security Mrs. Awadzi said it was important to protect depositors of the institutions whose deposits had been locked up for months and years and the public that continued to do business with those institutions without knowing their true finance condition. “The safety of the financial system was at stake, as confidence in the entire system was being eroded. The public simply did not know the difference between an SDI that was distressed and one that was not. “Once the public began to see signs of certain SDIs being unable to honour their obligations to their customers,  they started to demand a return of their deposits from other financial institutions, leading to challenges for those institutions that were otherwise strong,” she said. Clean-up saved jobs In a presentation, the Head of the Banking Supervision Division of the BoG, Mr. Osei Gyasi, said but for the clean-up, about 10,000 jobs would have been lost. For his part, the Executive Director of the Ghana Association of Savings and Loans Companies, Mr. Tweneboah Kodua Boakye, among other things, charged the media to support the growth and expansion of the sector. He said they should contact the financial institutions involved when clients lodged complaints with the media, especially regarding delayed payments, before publications.

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WE’VE PAID 99.2% OF BANKS, SAVINGS & LOANS’ CUSTOMERS – BAWUMIA

BOG | Matilda Akakpo | October 1, 2020 | Comment off

The Vice President, Dr. Mahamudu Bawumia has said that 461,339 depositors of Savings and Loans as well as microfinance firms have so far been paid their locked-up funds, following the revocation of licenses of some S & Ls and MFIs. At the same time, he reiterated that all customers of the nine defunct banks whose licenses were revoked by the Bank of Ghana have also been paid. “As we sit here today, all the banks depositors have been paid. And then you have the savings and loans and microfinance institutions, the depositors’ there–savings and loans were 300,089 depositors that have made reclaims– that is about 23 savings and loans. So far we have paid 296,344”, he told Philip Osei Bonsu of Asempa FM. Furthermore, Dr. Bawumia said “so the savings and loans, it’s only 3,745 that have not been paid because it is due to related and third party transactions which is being investigated. But all others have been paid.” “If you look at microfinance, there were claims of 165,168 and the receiver has paid 164,995. So in total, the claims for the savings and loans and microfinance which is 465,257 separate claims and then we’ve paid 461,339. So 99.2 percent have been paid”, he emphasized. The Vice President once again chastised the previous managers of the Central Bank saying they supervised a poorly structured microfinance sector. “As I said the microfinance sector was one of the most poorly set up sectors. They [microfinance institutions] had made all sort of investments that were not tenable; savings and loans too.  It was difficult essentially doing a rescue of all these struggling institutions”, he added. REASONS BEHIND REVOCATION OF LICENSES OF S&Ls The Bank of Ghana in August last year revoked the licenses of 23 insolvent savings and loans companies and finance house companies. The Central Bank in a statement attributed the move as necessary because the S&Ls have become insolvent even after a reasonable period within which the regulators has engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency. They include GN Savings and Loans Ltd, Ideal Finance Ltd, Unicredit Savings and Loans Ltd, Global Access Savings and Loans Company Ltd, Accent Financial Services Ltd, Midland Savings and Loans Company Ltd, First Allied Savings and Loans Co. Ltd. REASONS BEHIND REVOCATION OF LICENSES OF MFIs Earlier in May 2019, the BoG had revoked the licenses of 347 insolvent microfinance companies. The licenses of 192 of them were revoked in addition to that of another 155 that have ceased operations.

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BOG GOVERNOR JUSTIFIES CONVERSION OF BONDS TO CASH TO PAY DEFUNCT MFIs, S&Ls’ CUSTOMERS

BOG | Matilda Akakpo | September 30, 2020 | Comment off

The Governor of the Bank of Ghana, Dr. Ernest Addison has justified the recent decision by government to release an amount of GHS3.56 billion in cash, to fully settle claims of depositors of defunct Microfinance companies, Savings and Loans firms and Finance Houses, instead of sticking to the original plan to pay that amount using bonds. Customers had raised concerns over the five-year tenor, as well as the non-interest-bearing nature of the bond, saying the arrangement was essentially creating a significant loss in the value of their claims. BOG GOVERNOR SPEAKS Speaking at the just ended 96th Monetary Policy Committee press conference Dr. Ernest Addison explained that government adopted the cash payment method because its original plan to pay depositors of the defunct institutions with a combination of cash and bonds had become unpopular.  “Obviously it was not very popular, so government took a decision to redesign the bond. So, the zero-coupon bond was withdrawn and a new marketable bond in line with market trends was issued. The new bond was easy to sell for liquidity on the market. It’s a 3-year bond at an interest rate of 19%, which we’ve been able to offload unto the market, and the Consolidated Bank has received the Cedi equivalent which they are using to pay depositors.” Dr. Addison also allayed fears about the impact of the release of the money on liquidity in the system and subsequently on inflation. “We’re currently seeing currency outside banks at around 30%. We are watching that situation. As I said, the economy is operating significantly below potential, so these types of injections will not necessarily translate into inflation in the short-term, but it’s one of the risks in the outlook that we keep monitoring almost on a daily basis.” GHS3.56 BILLION CASH RELEASED TO SETTLE REMAINING CUSTOMERS OF COLLAPSED MICROFINANCE FIRMS, OTHERS Government earlier in September released GHS3.56 billion in cash to fully settle depositor claims of 347 defunct Microfinance companies, 23 Savings and Loans firms and Finance Houses that were being settled with bonds. Depositors started receiving the money from September 16, 2020. “Notice is hereby given that with effect from Wednesday 16 September 2020, affected depositors may contact any branch of Consolidated Bank Ghana Ltd (“CBG”) the paying bank to access their newly created Cash accounts which were originally designated as Commercial Paper (Bond) accounts at the bank,” a statement from the Receiver announcing the payment noted. Government had earlier released GHS6.07 billion for settling of depositors of the resolved companies in cash and bonds. While part of the amount was used to pay cash claims, GHS3.56 billion of the said amount was settled using Government-backed bonds. But there were concerns that this method, the non-interest-bearing nature of the bond and tenor of five years, did not make the bond commercially attractive, thus creating a significant loss in value of the claims by the customers. “Sensitive to these concerns and in order to provide additional liquidity to the financial sector, Government has made available to the Receiver/Official Liquidator additional cash amounting to approximately GHS3.56billion,” the statement said. COLLAPSED FIRMS On May 31, 2019, 347 microfinance companies had their license revoked by the Bank of Ghana as part of the financial sector cleanup. The Bank of Ghana, in August 2019, also revoked the licenses of 23 insolvent Savings and Loans companies and Finance Houses. These actions were in line with Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the license of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent.

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FINANCIAL SECTOR CLEAN-UP: ALL CUSTOMERS TO RECEIVE CASH PAYMENT INSTEAD OF BONDS

BOG | Matilda Akakpo | September 15, 2020 | Comment off

IN THE MATTER OF THE BANKS AND SPECIALISED DEPOSIT-TAKING INSTITUTIONS ACT,2016(ACT 930) AND IN THE MATTER OF THE RECEIVERSHIPS OF 347 MICROFINANCE COMPANIES AND THE 23 SAVINGS AND LOANS AND FINANCE HOUSE COMPANIES AND NOTICE OF CONVERSION OF GOVERNMENT BACKED NON-INTEREST-BEARING COMMERCIAL PAPER (“BONDS”) INTO CASH AT NO DISCOUNT IN RESPECT OF PAYMENTS TO AFFECTED DEPOSITORS OF RESOLVED MICROFINANCE, AND SAVINGS AND LOANS AND FINANCE HOUSE COMPANIES WHOSE CLAIMS HAVE BEEN VALIDATED IN THE RESOLUTION PROCESS  In line with Government’s commitment to protect depositors funds and to shore up public confidence in the financial system, Government made available to the Receiver of the above resolved companies, as well as the Official Liquidator of the Micro Credit Companies in official liquidation,  a combination of cash and Commercial Paper totalling approximately GHS6.49billion to fully settle the valid depositor claims on these institutions. As the Receiver/Official Liquidator brings the processing and payment of valid depositor claims to closure, a total amount of approx GHS6.07billion has been paid to some depositors of these resolved companies, leaving an amount of approx. GHS402million to be paid to the remaining depositors, to fully settle  all valid depositor claims in the resolution process. It should be noted that these claims include validated claims previously assessed by the Receiver/Official Liquidator as Late Submission claims owing to the fact that they were submitted after the extended deadline for the submission of depositor claims in the resolution process. Of the total amount of approximately GHS6.49billion required to fully settle all valid depositor claims in the resolution process, about GHS3.56billion of these claims in value representing approx 55% of total claims payable are being settled with Government of Ghana backed Non-Interest bearing Commercial Paper (“Bond”), with the remaining approx. 45% in value of claims payable, worth approx. GHS2.93billion being  settled with Cash. The Depositor Payment Scheme set up by the Receiver/Official Liquidator to administer and fully settle all valid depositor claims in the resolution process has largely been successful; however an area of concern for most of the affected depositors is with the features of the Commercial Paper used to partially settle the indebtedness of these resolved companies to those depositors whose claims were not fully extinguished by the payment of cash to them. These depositors have indicated that the features of the Bond, being non-interest bearing and with a tenor of five years do not make the Bond commercially attractive, thus creating a significant loss in value of their claims to them. Sensitive to these concerns and in order to provide additional liquidity to the financial sector, Government has made available to the Receiver/Official Liquidator additional cash amounting to approx.GHS3.56billion, equivalent to the total value of the Bond component of funding required to fully satisfy the indebtedness of the resolved entities to their body depositors. It is the expectation that this additional cash of approx. GHS3.56billion will replace the Commercial Paper which has been issued by Government in favour of affected depositors of these companies in resolution. The implication of the above is that depositors who have either received or are due Commercial Paper in partial satisfaction of their claims will now receive CASH payments at no discount for the Commercial Paper they have either received or is due to them.  Please note that depositors who have already discounted all or part of their Commercial Paper will receive a full refund in cash  of the discount they suffered. As a result of this new funding arrangement provided by Government, all valid depositor claims in the resolution exercise worth GHS6.49billion in value are being fully settled in CASH. Notice is hereby given that with effect from Wednesday 16 September 2020, affected depositors may contact any branch of Consolidated Bank Ghana Ltd (“CBG”) the paying bank to access their newly created Cash accounts which were originally designated as Commercial Paper (Bond) accounts at the bank ie CBG. Stakeholders may direct all questions or clarifications on the above to the coordinates below: Tel: 024 243 9441/ 0550000966 Website: www.ghreceiverships.com SGD ERIC NANA NIPAH

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NOTICE TO THE GENERAL PUBLIC – MFCs AND S&Ls WITH NO RECORDS

BOG | Matilda Akakpo | August 31, 2020 | Comment off

IN THE MATTER OF THE BANKS AND SPECIALISED DEPOSIT-TAKING INSTITUTIONS ACT, 2016 (ACT 930) AND IN THE MATTER OF THE RECEIVERSHIPS OF THE 347 MICROFINANCE COMPANIES AND 23 SAVINGS & LOANS AND FINANCE HOUSE COMPANIES NOTICE TO THE GENERAL PUBLIC Pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) (“the Act”), Bank of Ghana (“BoG”) on 31 May 2019 and 16 August 2019 revoked the operating licenses of 347 Microfinance Companies and 23 Savings and Loans and Finance House Companies respectively, and in accordance with Section 123(2) of the Act appointed Eric Nana Nipah, a Director of PricewaterhouseCoopers Ghana Limited (“PwC”) as the Receiver for the purposes of winding down the affairs of these Companies. As you may be aware, the mandate of the Receiver under Section 127(3) of Act 930 is to maximise asset realisations for the benefit of Creditors including Depositors, as well as settle the obligations of the company to its body of creditors to the extent possible. In carrying out his duties and as part of his Day 1 activities, the Receiver took control over the premises of these resolved companies and in the process, secured the assets and liabilities of these companies, as well as their books and records to the extent possible. A summary of the operational status of the resolved companies as at the date of revocation is set out below: Details Number of Resolved Companies Number of Operational Companies Number of Non-operational Companies Resolved Microfinance Companies 347 192 155 Resolved Savings & Loans and Finance House Companies 23 21 2 Total 370 213 157 Based on the above table, out of a total of 370 entities in resolution, 157 were non-operational with some of these companies having ceased operations long before BoG revoked their licenses. In the conduct of the resolution of these companies, a major challenge the Receiver has faced with some of the non-operational companies has been in the area of securing the books and records of these companies both manual and electronic. At the commencement of the resolution process, there were 157 non-operational companies whose books and records we were not able to locate and secure. Based on the collaborative arrangement we have with the Economic and Organised Crime Office (“EOCO”) which includes assets tracing and investigations, over time, we have been able to retrieve books and records from 131 resolved entities which were not operational at the commencement of the resolution of these companies, thereby making it possible for us to be able to validate creditor claims on these institutions. Currently there are 35 resolved companies with depositor claims worth approximately GHS252m which have no books or records available to us, to enable us to validate and settle these claims under the Depositor Payment Scheme. We are working with EOCO to locate and retrieve these companies records in order to be able to validate and settle depositor claims made on these companies. Attached at Appendix 1 is a list of the 35 resolved companies the Receiver is yet to obtain books and records on, to enable the validation of creditor claims including depositor claims to be undertaken in the resolution exercise.  The Receiver, No 54 Olusegun Obasanjo Highway Opposite Accra Girls High School Accra, Ghana www.ghreceiverships.com SGD ERIC NANA NIPAH   Appendix a)      Microfinance and Microcredit Companies Without Records       No Name of Resolved Institution Date of Closure No. of Claims  Value of Claims(GHS’000) 1 ABIS PLUS MICROFINANCE LIMITED Sept, 2014 31 24 2 AFRICAN TRUST MICROFINANCE LIMITED Dec, 2015 122 481 3 AG MICROFINANCE LIMITED May, 2017 2 4 4 BEDEL May, 2019 2 988 5 BENGAY MICROFINANCE LIMITED Dec, 2017 3 59 6 BIG DREAMS MICROFINANCE LIMITED Sept, 2013 1 1 7 BOIN MICROFINANCE COMPANY LIMITED May, 2019 4164 2,974 8 COMMON CAPITAL MICROFINANCE LIMITED Mar, 2016 2 1,283 9 CROWN CAPITAL MICROFINANCE LIMITED May, 2019 2 29 10 D-VANC MICROFINANCE LIMITED May, 2019 1 1 11 DWETIRE MICROFINANCE LIMITED May, 2019 5 10 12 ELITE MICROFINANCE LIMITED Jun, 2017 2 858 13 ERA MICROFINANCE SERVICES LIMITED Oct, 2013 23 943 14 GMET MICROFINANCE LIMITED Dec, 2016 1 659 15 GODIGO MICROFINANCE LIMITED Sept, 2013 10 8 16 GOLDEN TRUST MICROFINANCE CO. LIMITED Jun, 2017 3 2,451 17 HALAL MICROFINANCE LIMITED 2013 1 1 18 HIGH PRESTIGE MICROFINANCE SERVICES LIMITED Aug, 2016 5 188 19 ICS MICROFINANCE LIMITED Mar, 2015 1 6 20 JADA MICROFINANCE LIMITED Apr, 2014 1 13 21 JOPAT MICROFINANCE COMPANY LIMITED Jul, 2012 1 17 22 JOY HELP MICROFINANCE LIMITED Sept, 2016 5 17 23 KAPITAL EXPRESS MICROFINANCE COMPANY LIMITED Dec, 2018 1 6 24 KINGDOM TRUST MICROFINANCE LIMITED Oct, 2014 13 68 25 LIBERTY DAILY May, 2019 1 5 26 MAN CAPITAL MICROFINANCE COMPANY Apr, 2017 388 67,235 27 NOBLE DREAM MICROFINANCE LIMITED Mar, 2014 9,427 122,171 28 RESTORE MICROFINANCE COMPANY LIMITED Jul, 2012 1 20 29 ROYAL FUTURE MICROFINANCE LIMITED Oct, 2012 3 30 30 SAVANNAH MICROFINANCE LIMITED May, 2019 1 22 31 STAR PLUS MICROFINANCE LIMITED Sept, 2014 208 202 32 STARLING MICROFINANCE SERVICES LIMITED May, 2019 14 88 33 UNIQUE-MAS MICROFINANCE COMPANY LIMITED May, 2019 2 549 34 *GREAT AFRICA MICRO CREDIT COMPANY Jan, 2017 1 116 Total   14,448 201,527 *Great Africa Microcredit is under Official Liquidation       a)    Savings & Loans and Finance House Companies Without Records No Name of Resolved Institution Date of Closure No. of Claims  Value of Claims(GHS’000) 1 CREST SAVINGS AND LOANS November 2015 28 47,980 2 STERLING SAVINGS AND LOANS January 2011 3 2,735 Total   31 50,715

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ALL CUSTOMERS OF COLLAPSED BANKS PAID – BOG

BOG | 2019@@2019 | August 26, 2020 | Comment off

The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has said the Receiver of the collapsed banks has settled all payments due depositors. The governor said 95 per cent of the customers of savings and loans companies, microfinance institutions and finance houses had also been paid their deposits and investments. Dr. Addison, briefing the President, Nana Addo Dankwa Akufo-Addo, at the BoG yesterday on a number of issues in the financial sector, especially the banking crisis, said there was just about five per cent of depositors of the non-bank financial institutions which had large amounts of money to be settled that were swapped with bonds which were to be retired over five years. He also indicated that there were a few delays regarding depositors of the GN Bank/GN Savings and Loans and First Allied Savings and Loans which were cleared last three weeks. The governor added that the government had provided a bond worth GH¢1.7 billion, out of which GH¢700 million had been monetised, with which the Receiver was also working at clearing the last people that were left in this segment. President visits Dr. Addison gave the breakdown when President Akufo-Addo asked the governor to tell Ghanaians about the causes and effects of the banking sector clean-up and the state of payment to customers and depositors who had accounts with the banks. The President, who is the third President, after Dr. Kwame Nkrumah and J. J. Rawlings, to visit the BoG, paid a working visit to the central bank to commend the staff for their work and also salute them for the role they had played in managing the economy. He later visited the Ghana Stock Exchange (GSE), the first President to have done so, to interact with its management and staff. Measures Explaining to the President what the BoG had done to avert a repetition of the crisis, Dr. Addison referred to the passing of the new Corporate Governance Directive, which was at the heart of the crisis. He said because there was a lot of falsification of data submitted to the central bank by the financial institutions, the bank had brought in a new technology which would allow it to get the data directly from the sources to avoid human intervention in data retrieval. He said because many of the banks reported that they had capital when, in fact, they did not, the BoG had reviewed the entire capital verification process of banks, saying it was currently almost impossible to have a bank that did not have any capital to feign it. Dr. Addison said the staff of the Banking Supervision Department of the BoG had received a lot of training with the International Monetary Fund (IMF) and some other technical assistant providers. Results He said the clean-up had culminated in a stable financial sector with fewer banks and specialised deposit-taking institutions (SDIs) which were well capitalised, liquid, solvent and better able to support the nation’s economic growth agenda. Those were the efforts that helped the BoG to earn international recognition as the Central Bank of the Year in 2019, he added. Maximum support Responding to the governor, President Akufo-Addo said the government found it necessary to give the maximum support for the clean-up exercise because the fragility in the financial sector that his administration inherited was terrible. He said many of the people responsible for the crisis had found it convenient to point accusing fingers at those who were trying to clean up the mess. He said the matter had been handled very well, which had made the country come out of the financial sector crisis stronger. The President described the feat as a major achievement for the governor and his team, stating that it was one of the “reasons I wanted very much to come here”. Clear He said, however, that measures in place to forestall the recurrence of the banking crisis were not clear to many, saying too many people wanted to know, for instance, what particular specific measures had been taken within the BoG to prevent similar crises in the future. “I don’t think there is sufficient publicity. And I think with an occasion such as this, it is an opportunity to tell the Ghanaian people the measures that have been put in place to make sure that these events don’t recur, especially the banks’ own institutional mechanism to ensure that they don’t reoccur,” the President advised. AfCFTA He urged the BoG and the GSE to position themselves well to help the nation achieve its vision of becoming the financial hub of Africa. He said as the host of the African Continental Free Trade Area (AfCFTA) Secretariat, Ghana must provide the needed leadership for the rest of the economies on the continent to harness their collective efforts to ensure the success of free trade. President Akufo-Addo said the AfCFTA had great positive impacts and enormous possibilities for the future welfare of the African people, and that the host country for the secretariat would have to be seen to be offering the needed leadership on the continent. That, he explained, must come in the way in which the economies were properly managed and developed and the measures that would also allow the ideas of the free trade to succeed because the BoG would have to play a critical role in that compelling future. GSE To the stock exchange, which has listings from a couple of West African countries, President Akufo-Addo expressed the belief that Ghana would now serve as the headquarters of the AfCFTA and the centre of attraction for trade, in which the GSE would have a major facilitating and developmental role to play. “Your role in all of that is going to be critical. So the dimensions of the exchange and what is feasible on its part are growing larger and larger. It should have a Pan-African and continental camera to work and think,” he charged the two institutions. Strong “I think a strong and robust stock exchange is

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IT DIDN’T MAKE SENSE TO CONTINUE SUPPORTING THE COLLAPSED BANKS – BAWUMIA

BOG | Matilda Akakpo | August 25, 2020 | Comment off

Vice President Dr Mahamudu Bawumia says government had no option than to shut down some banks and financial institutions in the country. He said even though the situation is sad it didn’t make sense to continue supporting these banks that are suffering. “It was bad . . . when I saw the numbers at the time it was quite frightening,” he said. He said the banks were using the Central Bank’s liquidity support for other purposes. This follows claims that government could have used other means to save the banks and prevent the loss of jobs. The Vice President who was speaking in a one-on-one interview with Kwami Sefa Kayi on Peace FM’s morning show ‘kokrokoo’ said the then NDC administration was aware of the situation but did nothing about it and rather kept offering liquidity support. “The NDC was aware there was a problem . . . these were bad practices of government, but we had to step in,” he stated. “By the time we got into office things were unraveling; we were on the brink of the collapse of the system so the BoG had to rescue the situation. This is one of the most important acts that have been done to save the economy.”

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