The government has given a firm indication of its preparedness to hold persons involved in the unethical and criminal conduct in the banking sector to book.
This will be in addition to the introduction of mechanisms that will forestall a repetition of the current challenges in the financial sector in the future.
The Information Minister designate, Mr Kojo Oppong-Nkrumah, said at a news conference in Accra on Wednesday that the government was fully committed to going full throttle to clean up the sector once and for all.
He said the measures were part of efforts to clean up and strengthen the financial services, so that they could engender confidence and perform optimally.
“The challenges in the sector come in various forms — there are those who have their own challenges with the normal recoveries and there are those who literally went in to dip their hands into depositors’ money — and so for those who have been found culpable, sanctions will be brought to bear,” he emphasised.
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“These objectives are being achieved simultaneously and it is being done in strict compliance with the legal and international best practices that are known to us,” he added.
Money pumped in
The government has already pumped GH¢7.9 billion into emergency liquidity support for the distressed banks and to protect depositors’ funds.
This is in addition to the GH¢450 million used to capitalise the Consolidated Bank, the newly established entity that has absorbed the assets of the liquidated banks.
“The government is doing its best to ensure a full, firm and final resolution of the challenges that have bedeviled the financial sector,” the minister designate stressed.
But he cautioned that resolving the challenges could take some time, saying: “It may take a bit of time; it will be a difficult and expensive process, but the government is committed that it will be done.”
Not over yet
Mr Oppong-Nkrumah stated that the cleaning up of the banking sector was not over yet and that it would be carried on until the entire industry was cleaned.
He said the government had stepped in to provide relief and protection for depositors and ensure that deposits were safe.
“The government is ready to use the legal means at its disposal to retrieve and, where necessary, punish those found culpable,” he emphasised.
The government, he said, fully backed the actions of the Bank of Ghana (BoG) and had demonstrated that at all times.
The BoG has already announced plans to prosecute executives of the failed local lenders suspected to have dissipated depositors’ funds and carried out insider dealings.
It is also considering barring culpable directors from operating in the Ghanaian financial sector.
In a report on uniBank, the biggest of the failed lenders and ranked the country’s sixth largest lender by assets before its collapse, the BoG cited shareholders and other affiliates as taking for themselves GH¢5.3 billion ($1.1bn), representing 75 per cent of its total assets.
It said GH¢3.7 billion of the funds taken by shareholders was neither granted through the normal credit delivery process nor reported in the bank’s loan books.
But the founder of uniBank, Dr Kwabena Duffuor, has rejected the charges.
The BoG, on August 1, 2018, revoked the licences of five badly performing banks and created the Consolidated Bank as the receiver to manage the assets of the five collapsed banks.
The collapsed banks are uniBank Ghana, the Royal Bank, the Beige Bank, the Sovereign Bank and the Construction Bank.
The BoG last year rolled out measures to strengthen the financial sector in the country, leading to the collapse of the UT and the Capital banks.
Ghana’s banking sector has faced challenges, such as poor corporate governance and risk management practices, related party transactions, regulatory non-compliance and poor supervision.
The crisis in the sector has triggered calls for the prosecution of the directors of the failed banks.