Total loans taken over by the Receivers of the nine collapsed banks have amounted to GHS16.56 billion, the Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has said.
However, the total proceeds recovered up to date are above GHS1.2 billion.
They were realised through loan repayments by customers, recovered investments, vehicle sales, and recovered incomes.
Addressing participants at the New Year School and Conference organised by the University of Ghana, Dr Addison said: “To some extent, the recovery efforts have been hampered by frivolous legal challenges mounted by some complicit persons intending to frustrate the Receivers. These schemes ought not to be countenanced by the courts, as they do not inure to the benefit of the real victims of these multiple failures, the taxpayers, that have had to pay for the cost of these failures, and must not be left holding the raw end of the stick in the circumstances.”
The details of suspicious transactions, misappropriation of funds, false accounting and misreporting have been referred to the criminal investigative authorities and the Attorney General.
The Governor said: “We expect that criminal behaviour, once established, will be prosecuted and the perpetrators brought to book. We will continue to urge the law enforcement agencies and criminal investigative authorities to expedite their investigations into several suspicious transactions brought to their attention by the Receivers to facilitate prosecutions that may be necessary to ensure that justice is served.”
He reiterated that the central bank has undertaken a comprehensive and detailed internal investigation into possible complicity of its staff, adding that the management has sent clear signals to the staff about the need to ensure discipline and professionalism in line with the bank's new Code of Conduct that was launched in May 2019 alongside the establishment of the Ethics and Internal Investigations Office.
He noted that the revocation of the 420 licences, in total, was a painful but necessary exercise to sanitise the financial system while creating the environment for stronger and well-run institutions to thrive and play their expected role of supporting businesses of all sizes and households.
In the case of the failed banks, he said: “One thing was clear and that is: banks were set up overnight by little or no capital and by persons with little or no experience in running successful banks. What is more, all the resolved banks were managed or controlled by shareholders with complete disregard for prudential norms and best practices in corporate governance and the management of banks.”
“It became clear”, the Governor noted, “That these institutions were set up to use depositors' funds to finance other businesses of shareholders or other related or connected companies. In the process, oligarchies were formed involving various groups of companies under the control of common shareholding by a few politically-connected persons whose relationship with political authorities gave them a false sense of protection from the law and dared to do the unthinkable at the expense of depositors whose funds were used to keep these groups going.”
Restoring the health of the banking sector
Dr Addison said the Bank of Ghana has every reason to feel confident about the gains and achievements made so far in the financial sector, adding that the financial sector is currently healthier and better-able to withstand external shocks compared to what it was at the beginning of 2017.
“It is better-capitalised, liquid, profitable, and more efficient and has adequate capital buffers to manage adverse external developments. Such an optimistic outlook, seemed nearly impossible in 2017 when the reforms started”, he mentioned.
Sharpening monitoring, supervision and enforcement tools
In addition to new rules of the game, the Governor noted the central bank has introduced measures to ensure that the main instruments used in enforcing its rules are sharpened.
Specifically, the central bank has revamped its structures and procedures for licensing with more thorough due diligence and capital verification processes; introduced an enhanced process for making new rules which involve a more structured stakeholder consultation.
He emphasised that the recent launch of the Ghana Deposit Protection Scheme is another feature of a more resilient financial safety net for Ghana.
The Ghana Deposit Protection Corporation (GDPC) is now fully operational, with all banks, savings, and loans companies, finance houses, microfinance companies, and rural and community banks, currently admitted as members of the scheme.
In conclusion, the Governor said its mandate to promote the stability of Ghana's financial system involves a dynamic process of constantly reviewing its regulatory and supervisory framework and tools to ensure that it is able to help the banking industry deliver its mandate.