The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has appealed to the Chief Justice and the entire judiciary to assist the central bank to recover assets from the directors and shareholders of the collapsed banks.
He also called on the other investigative bodies to expedite their processes in order to retrieve all the funds locked up in loans, and other investments made by the collapsed banks before their licences were revoked.
According to him, the BoG will need the support of other state institutions to ensure that the banks operate within the remit of the law.
Speaking at the 17th Working Luncheon of the Ghana Association of Bankers, Dr. Addison said: “As regulators, we are very grateful for the support received – but urge the investigating bodies and judiciary, government, Chief Justice and security agencies to work steadily on recovering certain assets from shareholders, directors and loan defaulters of the erstwhile defunct banks. Currently, there are fifty-two cases in various courts of the country, 50 of which have been assigned to specific judges or courts.
“In addition, over sixty cases have been referred to the Special Investigative Team. The task is enormous, but we have confidence in our judicial system to bring those culpable to justice. The Bank of Ghana will continue to work with the Receiver to ensure that bottlenecks in the receivership process are cleared for an orderly winding-down of the defunct banks,” he said.
He added that: “I have every reason to feel confident about gains and achievements made so far in the financial sector. The financial sector is currently healthier and better able to withstand external shocks compared to the financial sector at the beginning of 2017. It is better capitalised, liquid, profitable and more efficient, and has adequate capital buffers to enable it manage any adverse external developments. Such an optimistic outlook seemed nearly impossible in 2017 when we started these reforms.
“A dynamic growth-oriented financial system must be strong, well-capitalised, and effectively supervised within a fair regulatory environment in accordance with international best practices and standards. There is therefore a huge regulatory burden on us to remain vigilant toward all forms of risk in the banking sector, and to tighten our regulatory and supervisory responsibilities to continue with efforts at strengthening and stabilising the banking industry.
“These reforms will ensure the safety and soundness of banks, aligning macro and micro-prudential risks to bank capital, and addressing cross-sectoral and cross-border risks to the industry. In order to address potential risks and properly risk-profile individual banks, we are taking steps to revise the current risk-based supervision framework in line with current developments in the global banking environment,” he said.
Seven local banks have collapsed after the cleanup exercise undertaken by the BoG.
The banks are uniBank Ghana Ltd, the UT Bank, the Capital Bank, the Royal Bank, the Construction Bank, the Beige Bank and the Heritage Bank.
Similarly, the BoG has revoked the licenses of twenty-three (23) Microfinance Institutions.
Some of the affected institutions include GN Savings and Loans Company which belongs to businessman and politician Dr Papa Kwesi Nduom, Unicredit Savings and Loans, Adom Savings and Loans, Midland Savings and Loans, Ideal Finance and Dream Finance Company.
The others are Accent Financial Services Limited, All Time Finance Limited, Alpha Capital Savings and Loans, ASN Financial Services Limited, CDH Savings and Loans Limited, Commerz Savings and Loans, Crest Finance House Limited, Dream Finance Company Limited, Express Savings and Loans Company, First African Savings and Loans Company, First Allied Savings, First Ghana Savings and Loans Company, First Trust Savings and Loans, Global Access Savings and Loans Company Limited, IFS Financial Services, Legacy Capital Savings and Loans Limited, Sterling Financial Services, Women’s World Banking Savings and Company Limited.
This move, according to the central bank, is to restore confidence in the banking and specialised deposit-taking sectors.
The BoG said in a statement that: “These actions were taken pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the licence of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent. The Bank of Ghana appointed Mr. Eric Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930.
“The revocation of the licences of these institutions has become necessary because they are insolvent even after a reasonable period within which the Bank of Ghana has engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency. It is the Bank of Ghana’s assessment that these institutions have no reasonable prospects of recovery, and that their continued existence poses severe risks to the stability of the financial system and to the interests of their depositors.
“In line with the Government’s commitment to protect depositors’ funds, the Government has made funds available to enable the Receiver pay depositors after their claims are validated. The Receiver will in due course make an announcement with regards to when and where payments will be made. The Receiver will also indicate documents required from depositors to facilitate the validation of claims and orderly payment of validated deposits. Other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realise value from the remaining assets of these institutions.”