Sacked workers of defunct S&Ls to be compensated – BoG

Former workers of the 23 Savings and Loans (S&L) and Finance House companies whose services will not be needed by the Receiver, Eric Nipah, will be duly compensated, the Bank of Ghana (BoG) has said.

In a press release accompanying announcement of the revocation of the 23 S&L and Finance House companies’ licences, the BoG said some staff will be engaged by their respective companies while others will lose their jobs.

However, the BoG assuaged fears of thousands of people who will be rendered jobless as a result of this exercise, saying they will be compensated accordingly.

“To minimise job losses, the Receiver will engage some staff of the affected institutions to assist him in undertaking the receivership process – which could take a few years. Employees of these institutions who won’t be engaged will be settled by the Receiver in accordance with the priority of payments set out in section 135 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930),” the BoG said.

The revocation of licences from these institutions, according to the central bank, has become necessary because they have become highly insolvent even after a reasonable period within which the Bank of Ghana engaged with them, in the hope they would be recapitalised by their shareholders so as to return them to solvency.

See Also:  Banks must increase support to private sector—Dr. Addison

In the Bank of Ghana’s assessment, these institutions have no reasonable prospects of recovery, and their continued existence poses severe risks to stability of the financial system and the interests of their depositors.

According to the BoG, some of the reasons which got the financial institutions to this situation include excessive risk-taking without the required risk management function to manage risk exposures; the use of depositors’ funds to finance personal or related-party projects or businesses on terms that were not commercial – leading to little or no income accruing to the relevant savings and loans companies or finance house companies, and thereby compounding their liquidity challenges.

Again, at the heart of the problems is corporate governance weaknesses with weak board oversight, poor accountability, and over-ride of internal controls; persistent regulatory breaches, involving non-compliance with Bank of Ghana’s prudential rules; and failure to implement Bank of Ghana on-site examination recommendations — all these culminating in rendering these financial institutions insolvent.

So, to protect depositors’ funds, the BoG said government has made funds available to enable the Receiver pay depositors after their claims are validated.  The Receiver will in due course make an announcement with regard to when and where payments will be made.

See Also:  Kennedy Agyapong cited for contempt allegations he is referred to Priviledges Committee

The Receiver will also indicate documents required from depositors to facilitate the validation of claims and orderly payment of validated deposits. Other creditors of the failed institutions will be settled by the Receiver upon validation of their claims, and to the extent that the Receiver is able to realise value from the remaining assets of these institutions.

Leave a Reply

Please Login to comment
Notify of