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BoG in process of raising GH¢7bn to support distressed savings and loans companies

The Bank of Ghana (BoG) says it is in the process of raising GH¢7 billion from the government to support savings and loans companies and other finance houses that are suffering.

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Speaking to Graphiconline.com, the Governor of the Bank of Ghana, Dr Ernest Addison the liabilities and finances of these distressed savings and loans are estimated at GH¢7 billion.

We have done our analysis and the estimate of the clean-up of the sector is about GH¢7 billion, which we have to find to complete the process.

“The engagement will ensure that the necessary funds can be raised on the part of the government to cushion depositors of these institutions,” Dr Addison said.

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The clean up exercise of the savings and loans companies is expected to begin before the end of 2019.

According to Graphic Business, it is unclear which module the central bank will adopt: either a purchase and assumption agreement, by which strong savings and loans companies will take up selected assets and liabilities of the insolvent ones, or consolidation of all the insolvent ones into a new savings and loans entity.

Dr. Addison, however, noted that the module to adopt was part of discussion ongoing between the central bank and the finance ministry.

Ghana government in 2018 spent about GH¢12 billion to liquidate seven struggling banks.

Ghana currently has about 37 savings and loans companies and 22 finance houses, with almost a quarter of them in distress.

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But only eight out of the 37 companies operating in the savings and loans sector have paid-up capital above the minimum amount of GH¢15 million.

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