GH¢11bn deposits saved in banking sector reforms

 

  • AG ready to go after shareholders, debtors of defunct banks
  • Specialised deposit taking institutions are next
  • GH¢502m paid to DKM customers

Government’s intervention in the banking sector in August this year has secured a total of GH¢11billion deposits and 2,661 jobs, Finance Minister Ken Ofori-Atta has said.

Delivering the 2019 Budget Statement in Parliament yesterday, the Finance Minister noted that government’s intervention in the financial sector over the past two years was necessary to avert a socio-economic catastrophe that would have been occasioned by the collapse of banks and other financial institutions.

“Through government’s intervention in August this year, deposits of some GH¢11billion have been saved, as well as some 2,661 jobs in addition to several hundred saved from the insolvent two banks that were closed in 2017. Government’s action has also created a strong indigenous Ghanaian bank in place of the five failed banks.

“The financial system is critical to functioning and development of the economy and banks are central to our financial system. In addition to providing employment to a large segment of the population, the role of banks as providers of credit and liquidity to the economy remains critical to the functioning of our economy,” he said.

Mr. Ofori-Atta added that government is supporting the Bank of Ghana’s work on a comprehensive action plan for cleaning up the specialised deposit-taking institutions (SDI) sector – made up of savings and loans companies, finance houses, rural and community banks, and microfinance institutions.

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“Government will support an orderly resolution of the difficulties, and will provide the much-needed funds to facilitate prompt pay-outs to their depositors,” he said.

He stressed that government’s action has led to significant progress made by banks in repairing their balance sheets by writing off bad loans and addressing capital needs.

“Banks are far advanced in executing their plans to augment their statutory capital in line with the new minimum requirement, compliance with which is expected by end-December 2018.”

GH¢502million paid to DKM customers

Mr. Ofori-Atta revealed that DKM’s official liquidator received 99,858 claims, and the validated claims amounted to GH¢502million.

“I would like to inform the country that out of the 99,858 claims, 79,708 (80 percent) have been settled and depositors have been paid. Government has set aside funds at the Bank of Ghana to pay the remaining 20 percent of depositors upon validation.

“An additional 12,612 claims have been fully provided for, but the customers have not as yet been able to show proof of deposit. This means that 92 percent of DKM claims from depositors have been paid or provided for. Depositors for the remaining 7,568 claims of above GH¢10,000 are yet to reach agreement with the liquidators,” he added.

Banking sector rescue and future repercussions

Mr. Ofori-Atta noted that the cost of rescuing the banks currently stands at GH¢9.9billion in monies that government had not budgeted for and which could have surely been put to good use to fix our numerous infrastructural needs, such as housing, roads and bridges.

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The central bank revoked the licences of two indigenous banks – UT and Capital – and further took measures to act over five banks that had liquidity challenges.

All the assets and selected liabilities of Construction Bank, Beige Bank, Royal Bank, UniBank and Sovereign Bank were transferred to a newly-created entity – Consolidated Bank of Ghana – that is 100% owned by the state

“This singular action of government has reposed confidence in the banking system, because it will ensure that no deposit will be lost and customers will continue to access their deposits without difficulty,” he said.

He stated it is important that the costs of these interventions, borne by taxpayers, are recovered to the extent possible through recoveries from debtors, shareholders, and related and connected parties who, through unfair means, siphoned funds from the defunct banks to the detriment of depositors, employees, other stakeholders, and the economy as a whole.

The receivers for the collapsed banks, Mr. Ofori-Atta noted, have already commenced civil actions against shareholders and directors to recover funds.

The Attorney-General has also set up a special investigation team that is preparing dockets to prosecute those found criminally liable.

“The Bank of Ghana has also set up an Office of Ethics and Internal Investigations to investigate all allegations of misconduct by staff, including any role in the collapse of defunct banks. Government will not shield anyone found complicit in the failure of those banks,” he stressed.

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