Member of Parliament for Bolga Central constituency, Isaac Adongo has accused the Central Bank of spreading lies just to justify its “disguised” banking sector clean up.
The lawmaker in a statement said “the government and the top management of the Bank of Ghana have been on a whitewashing campaign, trying to deceive Ghanaians into believing that all the institutions that lost their licences deserved to go out of business” after that questionable exercise.
Finance Minister’s Statement on Banking Crisis during Mid-year Budget Review
The Minister told Parliament that the bold and decisive measures taken to fix the banking crisis has paid off, adding “our banks are stronger and richer, and, with the cost of borrowing dropping, banks can and should, therefore, do a lot more to support the growth and expansion of business which will create more jobs under the stable environment that has been provided by Government for that exercise.”
He continued that the government knew the foundation for growing businesses and creating jobs everywhere was a vibrant, well-governed, well-resourced, competitive financial services sector, operating under a stable economic regime, that was why it could not watch the sector collapsing, even if it meant slowing down for a year or so on some of its own scheduled programmes.
In the recovery process, he said “we managed to set up the Consolidated Bank Ghana Limited and capitalised it with GH¢450 million. Just this month, CBG has released funds, totalling GH¢530 million to Cocobod for cocoa roads. We provided funding of GH¢11.2 billion to secure depositors’ funds in the failed banks. The Ghana Amalgamated Trust has provided funds, to capitalize solvent indigenous banks that were struggling to meet the enhanced minimum paid-up capital of GH¢400 million. We have recently provided an additional GH¢925 million for pay-outs to small depositors of the 386 microfinance institutions.”
He said confidence had been restored into the banking system, securing the otherwise distressed deposits of some 2,655,100 customers, as well as saving over 3,000 jobs. “Today, total banks’ assets have shot up to GH¢112.8 billion. Growth of credit to the private sector is rebounding assuredly by 16.8% in June 2019. I am, therefore, happy to announce confidently that Ghana is seeing the revival of that zealous, responsive and, at the same time, responsible banking environment we had been reduced to reminiscing.”
Recently, Governor of the Bank of Ghana also at the Working Luncheon of the Ghana Association of Bankers reportedly said that the banks which the Central Bank collapsed were beyond redemption.
But Adongo in his reaction to this in an open letter to the BoG Governor says the comment was the “height of falsehood and hypocrisy.”
According to the NDC MP, the BoG’s action was meaningless and only threw away billions of tax payers’ money in the name of receivership.
He added:” Interesting, not all the banks that survived the so called clean up exercise are better than those Dr Addison collapsed under the guise of them being beyond redemption. It is clear that Bank of Ghana allowed weaker banks without the requisite recapitalization that continue to pose a greater systemic threat to the banking sector to remain in operation.”
Below is the full statement by Adongo
Hon Isaac Adongo writes to Dr Addison
Stop the Lies; you took banks that were even stronger than some of those left
Since hiding under a vindictive and incompetent cloak disguised as banking sector clean up exercise to collapse banks and other deposit-taking institutions, the government and the top management of the Bank of Ghana have been on a whitewashing campaign, trying to deceive Ghanaians into believing that all the institutions that lost their licences deserved to go out of business.
The latest person to engage in that well calculated propaganda is the Bank of Ghana Governor, Dr Ernest Addison.
In an attempt to redeem his image and his shocking incompetence, Dr Addison is now finding new expressions to justify his decision to collapse 9 banks, 23 savings and loans companies, 347 microfinance companies and other financial institutions.
The Governor is reported to have said at the Working Luncheon of the Ghana Association of Bankers that the banks he collapsed were beyond redemption.
Before I go into the basics of his arguments, let me state that that comment was the height of falsehood and hypocrisy.
UT Bank, whose licence was revoked in 2017, needed just GH¢800m to turn around and continue creating opportunities for the thousands of people whose livelihoods depended on it. Royal Bank, on the other hand, needed a balance sheet restructuring with just GH¢450 million to be able to stay afloat.
Virtually the same applies to the rest of the collapsed banks. As for the Heritage Bank, the least said about it, the better. Dr Addison, in revoking the bank’s licence in January this year confirmed that Heritage Bank was solvent yet he hastened indecently to close the bank, citing a case in court.
It was clear from the revocations of the licences that the government and the Bank of Ghana prioritised the collapsed of the banks, in this case, Ghanaian owned businesses, over the need to help them stand on their feet.
It is, therefore, shocking that a Governor will fail to roll out a programme that will resuscitate these banks at a lesser cost but rather collapse them and throw away billions of tax payers’ money in the name of receivership.
Interesting, not all the banks that survived the so called clean up exercise are better than those Dr Addison collapsed under the guise of them being beyond redemption. It is clear that Bank of Ghana allowed weaker banks without the requisite recapitalization that continue to pose a greater systemic threat to the banking sector to remain in operation.
That is why Ghanaians want to know from Dr Addison, where the minimum paid up capital of Prudential Bank, Omni-BSIC Bank, NIB, UMB and ADB are?
Again, we want to know why Governor Addison made receivers to take over all the eight (8) banks from their shareholders but in the case of The Women’s World Banking, the same Governor gave it back to one of its shareholders, DATABANK?
Dr Addison must be told that a none negotiable principle of Public Policy is that, it is anchored on the fact that, it is applied in a manner that is without discrimination and without bias.
It is obvious from actions and utterances that Dr Ernest Addison is obviously motivated by personal greed and wickedness to brazenly violate this key principle of Public Policy. That personal stance of his, which is unfortunately against businesses of fellow Ghanaians, has been fertilised by the vindictive political dispensation that brought him into office two years ago.
For the avoidance of doubt, let me repeat that the entire financial sector clean up was nothing but a façade and a smokescreen designed to blindfold unsuspecting Ghanaians and to collapse competitors of DATABANK just to strengthen DATABANK and their cronies. And that is supported by developments in the country and elsewhere.
While Ghana was busy pumping billions of scarce tax resources to collapse banks, China recently saved two banks in order to strengthen their financial system without collapsing them.
It is sad to note that the current Governor of the Bank of Ghana only anchors the central bank’s regulatory reforms on “minimum capital” and proceeds to “kill” indigenous “rival” banks and businesses on that faulty basis in the name or strengthening them.
It is a shame that Dr Addison has used his tenure to destroy what we set out to build over 3 decades; a strong Ghanaian controlled financial sector, which saw the likes of Captain Kofi Amoanbeng (rtd),Dr Kwabena Duffour, Dr Papa Kwesi Nduom, Alhaji Seidu Agongo, Alhaji Adam Iddrisu and Mr Emmanuel Adu Sarkodie rising up for the occasion.
Dr Addison had a duty to protect this gain, not to recklessly mow it down.
As the government and Bank of Ghana continue to engage in semantics on the collapse of the banks, can someone ask Dr Addison how many Ghanaian banks were there when he addressed the Ghana Association of Bankers last week?
This is a critical question for a nation that is aiming at building indigenous businesses to help diversify our economy out of imports. Due to the technical and capital intensive nature of the operations in the extractive and telecommunications sectors, the country has virtually handed those areas over to foreigners while indigenes remain in the periphery. At this rate, we risk handing over the financial sector, which is the vein through which the blood (money) flows in the economy, to those same foreigners at the expense of locals.
Dr Addison and the NPP government and speedily doing that and all Ghanaians need to be genuinely concerned.