ADVERTISEMENT

Governor of the Bank of Ghana, Dr Ernest Addison, has blamed his predecessors for the recent failures in the banking sector

Dr. Addison has distanced the current leadership of the Central Bank and the government from the banking challenges, insisting the previous leadership should be held responsible for failing to take decisive actions when necessary.

___8250862___2018___4___13___19___addison-652x430

According to him, the previous leadership of the Central Bank looked on idly as things deteriorated without taking the necessary steps to mitigate the situation.

In the last two years, the banking sector has been met with serious liquidity challenges, with seven indigenous banks having already collapsed.

In 2017, the Capital Bank and UT Bank were over issues of bankruptcy and insolvency.

Some months ago, the BoG again dissolved five “insolvent” indigenous banks to form the Consolidated Bank of Ghana Limited.

ADVERTISEMENT

These were the Royal Bank, Sovereign Bank, The Construction Bank, uniBank and Beige Bank.

The government subsequently had to inject a whopping GH¢12.7 billion to clear the debts created by the defunct banks.

Addressing bankers at the 2018 annual bankers’ dinner, the BoG Governor said: “We inherited a financial system which was under a considerable state of distress, with banks that were not meeting capital adequacy requirement, banks that had suffered capital erosion with high non-performing loans, which had led to a weak transmission of monetary policy to the real economy.

“Some of these banks were insolvent and illiquid, others were solvent but illiquid. Our predecessors continued to provide liquidity support to these weak failing banks without addressing the underlying problems that led to the illiquidity and insolvency of these institutions.

“In short, the financial system had reached a tipping point and we could not just have assumed business as usual.”

ADVERTISEMENT

He said the current leadership of the Central Bank has done well to clean up the banking sector and has ensured that only licensed banks are regulated and allowed to operate.

“Additionally, the orderly intervention and revocation of these licences and the purchase and assumption transactions that ensued minimised the potential adverse impacts by ensuring that about 70 per cent of the 5,000 jobs in the affected banks were saved.

“This would be contrasted to what could have been the imploding of these banks and the contagion that could have resulted,” Dr Addison added.

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.
ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.com.gh

ADVERTISEMENT