Banking sector reforms not well executed - Analyst
Adnan Adams
Mohammed
Isaac Adongo, has
undermined the much-touted efforts by the Bank of Ghana for the banking sector
clean up, arguing that the manner the supposed reforms were carried out were
not necessary.
“The BoG could
have supported the banks instead of collapsing them”, he said, speaking at a
lecture on Ghana’s economy - organised by the Coalition for Restoration in
Accra, last week.
The National Democratic Congress (NDC) legislator also faulted the process used by the New Patriotic Party (NPP) superintended by BoG.
This is contrary to the former Head of Finance Department at the University of Ghana, Prof. Godfred Bokpin assertion on the clean-up, describing it as decisive.
The International Monetary Fund (IMF) has also lauded the clean-up, describing it as timely and necessary.
“We however, agreed that not all banks need the same capital,” Adongo recounted.
He said after setting the GH¢230 million base, they agreed to work with the individual banks to determine level of risk and then determine their minimum capital.
He said that was done so Ghana’s banking sector could have small and big banks “operating in a risk-free environment.”
“We call that Internal Capital Assessment project which will enable us to hand-hold the banks out of their challenges and not collapse them at the least excuse,” Adongo noted.
He said when the NPP took over, all they were determined to do was to collapse the struggling banks. “They introduced a minimum capital of GH¢400 million and they could not wait for the deadline to come.”
He added that the constant reminder of the deadline caused some panic withdrawals which further weakened struggling banks.
Between 2017 and 2019, seven banks went down. The BoG said some of these banks should not have existed at all.
Sovereign Bank, for instance, was cited as getting their license under false pretences, using non-existent capital.
Others run into various liquidity challenges including recording a woeful Capital Adequacy Ratio (CAR).
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