Former President John Dramani Mahama has once again faulted government for what he deems as an unjust banking sector clean up exercise meant to shut down a targetted number of financial institutions.

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) between 2017 and 2020.

According to Mr Mahama, the flagbearer for the National Democratic Congress, a number of these licenses were revoked out of malice.

Speaking at the 7th Ghana CEO Summit and Expo on Monday, May 22, 2023, the former president said "Indeed for some of these banks, there was no problem - purely politics or personal vendetta."

"One bank was shutdown solely because its principal shareholder was being investigated for corruption in a case involving a state enterprise," Mr Mahama said but failed to identify the institution he made mention of.

The Central Bank conducted an Asset Quality Review of banks in 2015 and 2016, which identified several indigenous banks facing significant challenges.

These challenges including high levels of non-performing loans, undercapitalization, and weak corporate governance led to a the banking sector cleanup, which saw BEIGE, Sovereign, Construction, uniBank (owned by former Finance Minister Dr Kwabena Duffuor), and Royal Bank merged to form 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 revoked and given to a receivership.

Among other things in his delivery today, the former president suggested that the banking sector cleanup exercise is shrouded in secrecy as government spent more than the estimated amount of GHS4 billion but failed to provide the reason for this.

"I cannot till this day understand why a GHS4 billion problem was made to cost the taxpayers GHS25 billion. These banks were asked to capitalize to GHS400 million and if there were even 10 of them, that would be GHS4 billion and yet with the closure of banks, we incurred a public debt of GHS25 billion guaranteeing depositors account," he said.

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.

While delivering his acceptance speech in Tamale a week ago, Mr Mahama registered his interest in providing the opportunity for experience banking hands - thousands of them who were laid off to secure their careers back once again and "move from the menial jobs that they were forced into with the closure of the indigenous banks."

"As a further assurance as far as practicable, and not note, as far as practicable, licenses that were unjustly canceled by this government will be restored," he first made the allegation.

According to Mr Mahama, one of the objectives of the next NDC government will be to promote robust local participation in the banking and financial, telecommunication, tourism, mining and agric and manufacturing sectors to grow the economy and create sustainable employment for the youths.

But in the interim as the NDC remains in opposition, he has entreated the government to "be apolitical in how it deals with businesses."

"It must create an environment where it allows businesses no matter their political ethnic or other colorations to thrive," the former president noted.

Source: The Independent Ghana