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Tue, Nov

PRESIDENT BACKS BOG: TAKEOVERS ARE TO SANITISE BANKING SECTOR

Business & Economy

President Nana Addo Dankwa Akufo-Addo has backed the decision of the Bank of Ghana to sanitise the banking sector by taking over seven indigenous banks which were poorly managed.

President Nana Addo Dankwa Akufo-Addo has backed the decision of the Bank of Ghana to sanitise the banking sector by taking over seven indigenous banks which were poorly managed.

 

Addressing the Ghanaian community in Rwanda as part of his state visit to the country, the president stated that the central bank cannot continue using taxpayers’ money to support such banks.

He explained to his audience that the with the support of the central bank, the Finance Ministry had taken over the assets of five of the seven banks as a prelude to establishing a new state owned bank, the Consolidated Bank of Ghana. He added that the new bank would be a much stronger indigenous bank alongside Ghana Commercial Bank to provide the leadership that the indigenous banking sector requires.

“We cannot have a situation where all the dominant banks in our country are foreign banks. It is very dangerous for our future if we allowed that to happen,” President Akufo-Addo said.

                                                                                       Establishing strong indigenous banks

He was, however, quick to add that if the country’s own indigenous banks are performing poorly, have poor governance structures with poor risk credit policies, “at the end of the day if we don’t take care that is what will happen. One by one they will go under.”

He said the government is ensuring that the banking sector of Ghana has strong indigenous banks that can compete successfully with foreign owned banks.

He made reference to the process of rationalisation in Nigeria where at the end of the day, the number of 84 indigenous banks was brought down to 13 which ensured that these banks became one of the best not only in Nigeria but Africa.

“It is not a question that we are going through a process to eliminate the indigenous banking sector from the banking system of our country. It wouldn’t make sense at all. On the contrary the process of rationalisation is to enable us emerge with a stronger set of indigenous banks to help us grow our economy,” he said.

                                                                                                         Background

The Bank of Ghana  last month revoked the licences of five banks and merged them into an entity known as Consolidated Bank Limited.

The BoG claims some of affected banks procured their operational licences through dubious means.

The five banks are The Royal Bank, Beige Bank, Sovereign Bank Limited, Construction Bank and uniBank Ghana Limited.

The Governor of Bank of Ghana, Ernest Addison, explained that efforts by the banks to overcome financial difficulties proved futile, resulting in the worsening of their plight, hence the decision to merge them.

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