Banking sector clean-up necessary, not destructive to Ghana’s economy - Financial analyst

A financial analyst, Micheal Dawson has justified the decision of the Bank of Ghana to sanitise the banking sector, as part of measures to restore stability following the banking sector clean-up exercise.

He indicated that the sector was in near collapse, hence the decision by the banking sector regulator to undertake the needed reforms.

“I

Read full articlecan tell you that, some depositors were not getting back their funds from some of the financial institutions. Some of the banks had also breached several banking regulations. Indeed, the financial system at the time was on the brink of total collapse."

"The central bank had clearly explained that the clean-up was based on poor business practices and weak capital positions of the banks and financial institutions. I am aware that the liabilities of some of the banks were more than their assets”.

Mr Dawson made these comments following the assertion by Mensah Thompson, the Executive Director of the Alliance for Social Equity and Public Accountability on Accra FM’s morning show that the banking sector reforms were destructive to Ghana’s economy.

“I will say that the resilience shown by the banking sector is due to the comprehensive financial sector reforms that took place before the Coronavirus pandemic. You can imagine what would have happened if the banking sector reforms wasn’t done. We would have woken up one day to see a collapse of the Ghanaian economy,” the financial analyst explained.

“The measures taken safeguarded the investments of about 4.6 million depositors and now there is confidence in the sector which also crucial for stability and confidence of the banking sector,” he added.

“I think the ASEPA boss does not understand the issues in the banking space or have the full facts of the reforms that took place and continue to take place. I think we should commend the Bank of Ghana for rather being bold and courageous to undertake these banking sector reforms.”

In 2017, the BoG undertook a clean-up exercise which saw the revocation of operating licenses of some eight banks, 23 savings and loans companies and more than 400 specialised deposit-taking institutions (SDIs).

According to the Receiver for some of the financial institutions, preliminary investigations found that most directors of the defunct financial institutions failed in their fiduciary responsibilities to customers and other stakeholders.

MA/FNOQ