Your confusion and recklessness collapsed the financial sector – Minority to BoG

The minority in Parliament is alleging that the Bank of Ghana “consciously made it impossible for banks to recapitalize so they could be collapsed”.

The group said various banks were left in limbo and unable to raise money to meet the minimum capital requirement because the BoG failed to release the “Fit and Proper Persons Guidelines for a greater part of the search for investors by banks to recapitalize.”  

“There was no idea as to who could invest in banks until about 6 months to the deadline,” the group stated.

Several banks were consolidated and had their licenses withdrawn on the suspicion they were not going to meet the new minimum capital requirement despite management of those banks remaining confident they can recapitalize.

Other banks also had their licenses withdrawn despite providing proof to demonstrate that their weak financial situation was due to the indebtedness of the government.

At a press conference today, the minority said the Central Bank also worsened the already precarious situation of the Banks through its “chaotic and often self-inflicting posturing in handling the banking sector reforms showed a complete lack of direction and focus in the whole exercise”.

The minority said the BoG failed to demonstrate that it had a clear strategic blueprint for implementing the financial sector clean-up and a clear cut idea of what it intended to achieve with the process.

“A very basic question such as what type of financial system they intended to achieve and measurable indicators of implementation outcome was not considered,” they stated.  

According to the minority the BoG’s lack of a blueprint created uncertainty and confusion in the financial sector.

“The BoG just like the Government’s approach to major national programmed adopted a ‘reform as you go’ approach for a very delicate and interconnected industry. No one knew what to expect,” the group stated.

Citing the situation of the Savings and Loans Companies, the minority said the issuance of threats of collapse by the Bank of Ghana sparked of panic withdrawals which made the companies rife for collapse.

“To date Rural and Community Banks who suffered unnecessary panic withdrawals sparked by reckless comments of the BoG Governor do not know what to expect. S&Ls were collapsed before issues of minimum capital and recovery plans were contemplated by the BoG,”  

Story: Sena Nombo/Radiogoldlive.com