Economist Kwame Pianim has condemned the license revocation approach used by the central bank and the Securities and Exchange Commission in sanitizing the financial sector.
According to him, license withdrawal should be the last option to be considered when the regulators intend to clean up the financial space.
Speaking at the Tesah Capital Webinar on “investing in the financial sector post clean up”, Mr. Pianim raised concerns about the lack of regulatory coordination of the sector.
“I think that what happened in the past was due partly to lack of jurisdiction. With some of the Ponzi schemes, it was not clear whether the Bank of Ghana or the Securities Exchange Commission was to regulate them.”
“Revoking a license is not the right thing to do to these companies. The idea is to be there, guide them when they are going wrong and let them know that you’re monitoring their accounts so if they’re not paying their bills, you are going to deal with them,” he said.
Meanwhile, the Deputy Director-General of the Securities and Exchange Paul Ababio also spoke on on payment to be made to customers of Black Shield Capital.
“Gold Coast is still in court with us so we haven’t got a liquidation order for them. So, on that side, it’s a partial bailout but once we secure the liquidation order or know the outcome, we’ll know the way forward.”
“What is happening now is that those we have liquidated are those we bring into the full bailout. So those who do not have will be in the partial bailout until it is completed,” he said.
Financial sector clean-up
On Monday, August 14, 2017, the BoG revoked the licenses of two prominent indigenous banks – Capital Bank and UT Bank.
At the same time, the Central Bank had approved a Sale and Purchase Agreement that allowed GCB Bank to immediately take over the assets of the distressed banks.
It followed with subsequent revocation of licenses of Unibank, The Royal Bank, Beige Bank, Sovereign Bank, and Construction Bank that were merged into Consolidated Bank Ghana (CBG).
Governor, Dr. Ernest Addison explained at a press briefing that these banks were vulnerable to inadequate capital, high levels of non-performing loans, and weak corporate governance.
Kwame Pianim, economist