BoG frustrating shareholders’ efforts in revamping S&Ls, finance houses …earmarks 23 for closure

News desk report

The central bank has been accused of frustrating efforts by shareholders and managements of struggling savings and loans and finance houses to revive their operations, while it readies a list of 23 financial institutions to close down and revoke their licences.

Several management executives and shareholders, who have spoken to the B&FT on condition of anonymity, have expressed their worries at the actions and inactions of the Bank of Ghana and finance ministry – which they describe as very unfortunate.

After a comprehensive clean-up of the banking and microfinance sector, which cost the taxpayer GH¢12billion, the central bank has turned its attention to the savings and loans and finance houses sector.

Analysts have opined that the cost of cleaning up that sector could be in excess of GH¢5billion and could bring costs of the whole financial sector reforms close to GH¢20billion, a significant burden on the taxpayer.

Also, a reliable source at the BoG told the B&FT yesterday that the regulator has sent a list of 23 insolvent finance houses and savings and loans companies to the Presidency for approval. When approved, it will see the regulator revoke the licences of those institutions and proceed to appoint receivers and issue bonds to pay off depositors.

A management executive of one of the finance houses told the B&FT that his institution has been trying to merge with another one for the past two months – but whenever a request is made to the central bank, the regulator will either not respond or come back several weeks later and make several demands with very limited timelines.

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“We have been in talks with another finance house to see how we can merge our operations. But you cannot move forward without approval from the Bank of Ghana. When we sent letters to the BoG of our intention we did not hear from the regulator for three weeks. We sent another letter before we got a response on what to do next.

“While we moved forward with their request, they (BoG) are yet to get back to us. This is what we have been facing up to now. To me, it is deliberate and does not speak well of the central bank,” the management executive said.

A shareholder, who is tussling with government over unpaid loans, believes that the actions of government go against its promise of supporting local businesses and are rather promoting the interests of foreigners in the country.

“Government owes us considerably. The finance ministry has confirmed that it owes contractors who owe us. If government knows it owes us, why is the Bank of Ghana asking us to introduce fresh capital into our businesses when the capital from government can bring us back to very liquid status? Isn’t this hypocrisy at the highest level?”

Another shareholder questions the impact of reforms in the banking and microfinance sector on the whole economy. He opined that since the revocation of microfinance licences, not even a single depositor has been paid. He noted that the Ghana Amalgamated Trust (GAT), established almost nine months ago, is yet to invest in the five local banks.

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“We have invested in some microfinance companies whose licences have been revoked. We are yet to receive any money and the same applies to the Consolidated Bank. Meanwhile, the same approach is about to be used in the savings and loans and finance houses space. If this isn’t incompetence, then I do not know what it is,” he added.

“Since the beginning of reforms, we have seen the collapse of nine banks, many microfinance companies, the creation of Consolidated Bank and the GAT. But honestly, what has changed? NPLs are still high, and local banks are still struggling. It is only the foreign financial institutions that are benefitting from the reforms, because customers are afraid to save with the locals,” he noted.

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