Member of Parliament for Sekondi Andrew Egyapa Mercer has justified the clean-up exercise undertaken in the financial sector by the Akufo-Addo administration.
In his view, the consequences would have been dire if the government had not acted to clean the sector.
Speaking on the Big Issue on TV3 Tuesday, May 23, he indicated that the Bank of Ghana under the previous National Democratic Congress (NDC) administration gave liquidity support to some of the struggling banks but the cash was misapplied yet no action was taken.
“They gave liquidity support to banks for people to squander, it is in the report,” the Deputy Minister of Energy said.
He further asked, “What would have been the outcome of government not doing anything?”
On the banking issue, Former Deputy Finance Minister Kweku George Ricketts-Hagan, said the defunct Beige became a bank too swiftly after operating as a Savings and Loans company,
Mr Ricketts-Hagan also questioned why Construction Bank, a bank he said was meant for construction, was given a universal license.
The Cape Coast South lawmaker indicated that the way and manner licenses are given to banks ought to be relooked at.
He said these while speaking on the Key Points on TV3 Saturday, May 20 in relation to a promise made by former President John Dramani Mahama that the licenses of banks that unjustly collapsed would be restored.
He said “With these banks [Merged into CBG], John Mahama can come back to power and do some segregation of assets.
“Some of them can get back their licenses but they can go back to become Savings and Loans because UT was Savings and Loans for a long time before it became a bank. Beige became a bank very quickly after a short span being savings and loans, so we have got to look at the license given.
“Construction Bank was a bank meant for construction, why should such a bank be given a universal license?
“It is just like what we have done to ADB which was meant for agric but we gave it a universal license and now it is doing all sorts of things. NIB was set up for a purpose but it has become something else. Now we have set up a development bank which could have been NIB.”
Mr John Dramani while promising to restore the license of some of these banks also assured to support the staff of the banks who were laid off during the banking sector cleanup exercise and have had to rely on menial jobs to keep body and soul together.
Delivering his formal acceptance speech at the University of Development Studies (UDS) on Monday, May 15 after his victory as flagbearer of the National Democratic Congress (NDC) on Saturday, May 13 he said “Let me restate what I said in Ho during the launch of my campaign for Flagbearer— we shall promote robust local participation in our banking, financial, telecommunications, tourism, mining, agriculture, agribusiness, and manufacturing sectors to grow the economy and create sustainable employment for the youth.
“We will restore indigenous Ghanaian investment in the finance and banking sector and create a tiered banking system that will serve various segments of the market. We will give the opportunity for experienced banking hands who were laid off, to secure their careers once more and move from the menial jobs they were forced into.
“As far as practicable, banking licenses that were unjustly canceled by this Government would be restored.”
Some local banks collapsed when the central bank revised the minimum paid-up capital for existing banks and new entrants from GHS120 million to GHS400 million.
According to the regulator, this was to test the viability of the banks.
The banks that were unable to meet this new requirement were either merged or collapsed.
Some nine local banks, 23 savings & loans companies, 347 microfinance institutions, 39 finance houses and 53 fund management companies closed down during the exercise.
UniBank, The Sovereign Bank, The Beige Bank, Premium Bank, The Royal Bank, Heritage Bank, Construction Bank, UT Bank, Capital Bank all collapsed. Some analysts and observers criticized the BoG and the Finance Ministry over the collapse of the banks because in their views, these banks could have been saved to continue employing Ghanaians.