There is a possibility that a number of financial institutions who suffered shutdown during the banking sector-cleanup exercise that occurred between 2017 and 2020 may be able to bounce back.
This is so because 2024 flagbearer for the National Democratic Congress (NDC) John Dramani Mahama has pledged to restore the licences of financial businesses who were run out of business unjustifiably should he win the next poll.
Speaking at the University for Development Studies (UDS) in Tamale today, May 15, 2023 to formally accept his role as flagbearer, the former president said: “We will restore indigenous Ghanaian investments in the finance and banking sector and we will create a tier banking system that will serve various segments of the market.”
“We will give the opportunity to experience banking hands who were laid off needlessly to secure their careers once more and move away from the menial jobs that they were compelled to take.
“As far as practicable, the banking licenses that were unjustly canceled by this government will be restored,” he added.
The banking crisis in Ghana led to the revocation of the licenses of more than 400
financial institutions that were licensed under Act, 2016 (Act 930) by the Bank of Ghana (BoG).
The Bank of Ghana conducted an Asset Quality Review of banks in 2015 and 2016, which identified several indigenous banks facing significant challenges. These challenges included high levels of non-performing loans, undercapitalization, and weak corporate governance.
To address these issues, the Bank of Ghana implemented interventions, resulting in the merger of five banks: BEIGE, Sovereign, Construction, uniBank (owned by former Finance Minister Kwabena Duffuor), and Royal Bank. This merger led to the formation of a new entity known as Consolidated Bank of Ghana.
Also more than twenty financial institutions including UT Bank which was owned by Prince Kofi Amoabeng, had their licenses being revoked and given to a receivership.
Following the recapitalization of the banks and a new capital requirement, the number of banks in the country reduced from thirty-six to twenty-three.
Ghana invested more than twelve billion Ghana cedis for this clean-up exercise in the banking sector.
In March 2021, Parliament received petitions from Prince Kofi Amoabeng and Dr Kwabena Duffuor, owners of the UT Bank and uniBank respectively.
The two asked Parliament to investigate the conduct of the Bank of Ghana and the Ghana Stock Exchange in revoking the licenses of their financial institutions.
On March 23, 2021, the Speaker referred to petitions to a seven-member committee of Parliament to investigate and report to the House. The Bank of Ghana was invited over the matter but declined the invitation to appear before the House.
The BoG explained that its decision was taken according to its statutory powers under the Banks and Specialised Deposit Taking Institutions Act, 2016 (Act 930). It added that the probe “flies in the face of the Constitution.”
With the promise to investigate what happened five years ago, Ghana may see an increase in the number of financial institutions.
According to Mr Mahama, among his many objectives is to “promote robust, local participation in our banking and financial, telecommunication, tourism, mining and agric and manufacturing sectors to grow our economy and create sustainable employment for our youths.”
Source: The Independent Ghana