Banking sector cleanup was to restore sanity in financial institutions, Finance Minister
Why does the cost of the financial sector clean-up keep changing, Bright Simons asks
Ghana’s banking sector cleanup occurred between August 2017 and January 2020 when the country allowed indigenous banks to take over some non-performing banks in the country.
This was to strengthen Ghana’s banking sector.
The clean up according to the government cost GH¢11.7 billion as cited in the 2020 budget statement.
The clean-up saw a reduction in the number of banks from 34 to 23 currently, whilst 347 micro-finance institutions, 15 savings and loans, and 8 finance houses had their licenses revoked.
They included UT Bank, Capital Bank, Sovereign Bank, Beige Bank, Premium Bank, The Royal Bank, Heritage Bank, Construction Bank, and UniBank.
Six Banks were merged into three banks. They were First Atlantic Merchant Bank Limited and Energy Commercial Bank, OmniBank Ghana Limited and Bank Sahel Sahara Ghana as well as First National Bank and GHL Bank Limited.
However, Finance Minister Ken Ofori-Atta during a press briefing on Thursday, March 24, 2022, said, the clean-up exercise cost government GH¢25billion since 2018.
“Restructuring the banking sector to protect the savings of 4.6million depositors and strengthening the financial sector. So far, government has spent over 25billion since 2018 to clean up the financial sector.”
“It is this proven record of fixing what is broken by the NPP government and…it is this same can do and will do attitude that gives us hope that we’ll overcome the current crisis,” he added.
This indicated an increase in the earlier GH¢16billion that was stated by government.
Meanwhile, Vice President of Imani Africa, Bright Simons, has questioned why the cost of the financial sector clean-up done by the government keeps changing.
According to Bright Simons, the government said the cost of the clean-up was approximately GH¢ 11 billion in 2019, in 2020 it said the cost of the GH¢ 16 billion and now it is saying it is GH¢ 21 billion.
“The 2019 Ghana financial sector cleanup was needed. But there are questions:
1. Why does the cost keep changing?
"In 2019, BoG said total cost = 11bn GHS. In 2020, it changed to 16bn. Now, 21bn? 2. What about the massive asset recovery? 3. The financial sector recovery levy?” a tweet shared on April 8 by the Imani vice president read.
Also, Simons questioned why the government has not failed to account for the assets it recovered from the financial institution but it keeps mentioning the cost of the clean-up.
“How can govt attribute the rise in national debt to the costs of the cleanup but refuse to account for: 1. Resources from the good assets of those banks they have given to other banks & those still being liquidating/recovered? 2. Taxes imposed on banks to pay for the clean-up?” he questioned.
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