Banks’ takeover should not lead to job-losses —TUC tells BoG

The Trades Union Congress (TUC) has told the Bank of Ghana to put in all the necessary measures to ensure that the collapse and merging of five distressed banks does not lead to loss of jobs as happened in the case of UT and Capital Banks.

It is reported that GCB’s takeover of UT and Capital Banks last year resulted in close to 250 people losing their jobs.

In a statement signed by its Secretary-General, Dr. Yaw Baah, the TUC said while it welcomes the central bank’s move to merge the five banks into the Consolidated Bank Ghana Ltd., all jobs need to be safeguarded.

“Given the current level of joblessness in the country, it is important that developments in the banking sector and the measures being taken to address them do not add to the huge unemployment challenge. We urge the Bank of Ghana to do everything in its power to safeguard all the existing jobs,” the statement said.

The banks’ failure comes at a great cost to the economy, some GH¢8billion, after the central bank announced that a GH¢5.7billion bond will be issued to finance the gap between liabilities and assets of the five consolidated banks – after already doling out a GH¢2.2billion bond to settle the liabilities of UT and Capital Banks: the first two banks to go down.

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The TUC urged the central bank not to treat with kid-gloves any officials found complicit in the banks’ collapse, but rather apply the country’s laws to the fullest.

“To prevent repeat of the irregularities, including regulatory and supervisory failures that have led to the current situation, it is important that the activities which have led to the current banks’ collapse and necessitated what is perhaps the biggest bank bailout in Ghana’s history, must be properly investigated and those culpable punished in accordance with the laws of the land,” the statement said.

An expert in corporate governance, Dr. Richmond Atuahene – in an interview with the B&FT on Monday – also said the Bank of Ghana cannot be exonerated from the mess and distress of the financial sector, saying it was lax in its role as supervisor and regulator.

“Uneven supervision and inadequate enforcement have played a significant role in exacerbating the problems associated with widespread financial distress and bank failures over the past decade. The Bank of Ghana has been ineffective in foreseeing and supervising the massive changes since 2003 when the universal banking model was introduced, or in eliminating the pervasive corporate governance failures…

“No one was held accountable for addressing the key banking industry issues such as risk management, corporate governance, cross-regulatory coordination, enforcement, Basel 11, IFRS, legal prosecution or ensuring examination policies, follow-ups and procedures were well-adapted to emerging issues in the prevailing environment.

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“Enforcement was the biggest failure among surveillance processes. Despite the fact that Bank of Ghana had all the needed powers under the Banking Act, it could not enforce the examination recommendations,” he said.

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