Receivers Carry Defunct Banks’ GH¢10.1bn Loans
Total Loans taken over by receivers appointed by the Bank of Ghana (BoG) during its financial sector clean-up exercise amounted to GH¢10.1 billion, while total proceeds realized up to date are over GH¢849 million.
Dr. Ernest Addison, Governor of the central bank, who disclosed this, said the proceeds were realized through loan repayments by customers, placements repaid, proceeds from sale of vehicles, bonds, other income such as interest from placements made and the refund of commissions paid.
Some of the affected banks included UT Bank and Capital Bank, whose licences were withdrawn initially, followed by the revocation of the licences of Beige, Sovereign, Construction, UniBank and The Royal Bank who were later consolidated.
Appeal to Government, Judiciary
Addressing the 17th annual working luncheon of the Ghana Association of Bankers, Friday in Accra as the keynote speaker, he stated: “As regulators, we are very grateful for the support received but urge the investigating bodies and the judiciary, government, and security agencies to work steadily to recover certain assets from shareholders, directors and loan defaulters of the erstwhile defunct banks.”
He said currently, there were 52 cases in the various courts, 50 of which had been assigned to specific judges/courts. In addition, over 60 cases had been referred to the Special Investigative Team.
“We have confidence in our judicial system to bring those culpable to justice. The Bank of Ghana will continue to work with the receiver to ensure that bottlenecks in the receivership process are cleared for the orderly winding down of the defunct banks,” the Governor said.
Cost of political interference
“Unfortunately, our predecessors in line with the governance challenges in the country at the time, allowed the central bank operations to be intertwined with the political economy, thereby committing considerable resources into non-core functions of the bank, including building 5-star guest houses in Takoradi and Tamale as well as the Bank Hospital in Cantonments.”
According to him, the central bank have been refocused around its core central bank responsibilities, namely monetary policy and exchange rate management, price stability, financial stability, banking sector regulations, and supervision.
“A number of our staff are going through internal administrative process to establish culpability, if any, that contributed to the challenges resulting in the clean-up of the financial sector,” adding “in fact, a staff was dismissed for gross misconduct and conflict of interest, involving the award of the Sibton Switch Contract which was cancelled in August of 2017. The signal has been sent clearly to staff about the need to ensure discipline and professionalism in line with the new 'Code of Conduct' that was launched in May this year.”
Expected gains from reforms
He said the central bank expects access to credit, to be on a 'predictable' and 'cost effective' terms as part of the benefits of the reforms.
BoG, he said, last week, met with all commercial banks and discussed ways in which such results could be realised by the end of the year, even though he added that such a successful outcome would depend on macroeconomic policies and reforms in the financial sector.
“But it will also depend on the private sector's own initiative, resourcefulness, and capacity to take advantage of opportunities that have been created by the reforms.”
He said “we are aware that the clean-up of the MFI has led to a sharp fall in deposit rates of MFI in Ghana, as depositors would rather save with strong well managed institutions than chase yield. This should have a knock on effect on all deposit rates in the financial sector.”