The Finance Minister, Ken Ofori-Atta, has said the acquisition of a banking license without regulation becomes a license for financial institutions to steal from the state and depositors.
Justifying government’s actions in the banking sector at the Danquah Institute Forum in collaboration with Citi FM on the theme, ‘The Banking Clean Up, Are Depositors Safe?’, the Finance Minister said regulations are put in place and acted upon so that banks do not steal from the state and people who bank with them.
“A banking license, ladies and gentlemen, is actually in a very crude way a license to steal money if there is no regulation because essentially the banks will have permission to take your money and my money if there is no regulation, the banks do what they want to do,” he said.
He said the collapse and subsequent clean up was necessary because some bank shareholders and directors were diverting depositors money for personal gains because there were no active checks on inter-party transactions.
“The heart of the matter is that it is really plain thievery on the citizens by certain bank shareholders and directors and also a clear compromise of the regulatory leadership on a scale that has not happened before in our country’s history.”
The Bank of Ghana has consolidated five local banks into what it calls the Consolidated Bank Ghana limited.
The banks are Beige Bank, Construction Bank, Royal Bank, uniBank and Sovereign Bank.
According to the Governor of the Bank of Ghana, Dr. Ernest Addison, some of the banks obtained their licenses through false means by presenting documents that painted a picture as though they could meet the new capital requirement.
“The government has recapitalized the consolidated Bank Ghana Limited to take on including all liabilities of these five banks. The government has also issued a bond of GHc5.76 billion to cover the gap between the liability and assets assumed by the Consolidated Bank. The Consolidated Bank Gh. Ltd is expected to play a strategic role in the transformational agenda of the government,” he said.
Dr. Addison however assured clients of the affected banks that “your monies are safe.”
The banks collapsed despite the fact that the Bank of Ghana had supported them with hundreds of millions of cedis to enable them to recover from distress.
Their collapse has however resulted in the state incurring more cost in fixing the mess created.
This has increased public agitation as some of those said to be complicit in the mismanagement of the banks misapplied the funds leading to the eventual collapse.
Duffour sues BoG for revoking uniBank’s license
Meanwhile, a shareholder of defunct uniBank, Dr. Kwabena Duffour, has sued the Bank of Ghana for revoking the license of his financial institution.
In a suit filed at an Accra High Court, his lawyer, Professor Raymond Atuguba of Atuguba and Associates among other things asked that the revocation of the bank’s license be declared as “null and void and in breach of Article 23 and 296 of the 1992 Constitution.”
Dr. Duffour is also seeking a declaration that the Consolidated Bank Ghana Limited cannot take over the bank’s assets and liabilities including deposits of depositors.
He also wants the High Court to order the Bank of Ghana to give him back his bank.