A Financial Analyst, Sydney Casely-Hayford has described the action by the Bank of Ghana (BoG) to consolidate five local banks into one entity as a good decision.
He said that the move by the BoG was necessary to protect the interest of depositors/customers and prevent the banks from collapsing.
The BoG on Wednesday consolidated five local banks namely uniBank, Royal, Sovereign, Beige and Construction banks into Consolidated Bank Ghana Limited.
This follows the revocation of their licenses, partly due to their weak financial position to meet their financial obligations despite continuous liquidity support from the BoG, growing Non Performing Loans, and severe capital impairment.
Speaking in a telephone interview with the Times Business in Accra Mr Casely-Hayford said the action by the BoG was to sanitise and bring stability to the banking and financial industry.
Banking, he said must be done line with rules and regulations, adding that the affected banks operated without recourse to the rules and principles of the banking industry and the BoG had not option than to move in to crack the whip.
Quizzed on position being held by a section of the public that the move by the BoG to consolidate the five local banks was to clamp down on indigenous banks and prop up the international banks, Mr Casely-Hayford responded in the negative.
“The decision by BoG to consolidate the five local banks has nothing to do with international or indigenous banks,” he said, stressing that those who castigate the action to consolidate the five local banks were trying to be “politically mischievous.”
He said the consolidation of the five local banks by the BoG was to save the banking industry and ensure that players in the space played by the rules and regulations.
Mr Casely-Hayford entreated the BoG to search for the Directors and Management of the five local banks whose inactions had created the mess in those banks and prosecute them to serve as deterrent to others, sting that those who perpetrate financial crimes must not go scot free.
The Financial Analyst, however, blamed the Banking Supervision Department of the BoG for reneging on its responsibilities, pointing out that the financial irregularities which led to the merger of the five local banks could have been averted if the Banking Supervision Department had “taken action.”
Mr Casely-Hayford suggested that the officials of the Banking Supervision of the BoG who supervised the mess at the five consolidated banks should be brought to book.
In a related development the Institute of Directors Ghana (IoD) says it supports the efforts by the Central Bank to sanitize the banking sector.
A statement signed by its president Rockson Dogbegah and issued in Accra yesterday said “We encourage depositors and shareholders of the affected banks to stay calm as the BoG put measures in place to secure their investments.”
“We also call all other sectors of the economy to review and enhance their corporate governance culture to promote sound growth,” it said.
The statement said “ IoD Ghana is ready to support Consolidated Bank Limited and other institutions to enhance their corporate governance structure to promote sound growth.”