Second Deputy Governor of the Bank of Ghana (BoG), Elsie Addo Awadzi, has once again touted the scope and timing of the financial sector clean-up – stating that it has left the nation with more resilient financial institutions, without which the post-pandemic recovery would have proved nigh impossible.
While the reforms are a work in progress, with lower levels of asset toxicity to be attained, she argued that the role of most-recent reforms in insulating the economy against adverse shocks of the ongoing pandemic cannot be over-emphasised, and suggested that a better appreciation of its benefits will be recorded with the passage of time.
She expressed these thoughts at a webinar organised by the UPSA Law School, which had as its theme ‘Toxic Assets, Insolvency and Liability of Banks’.
“The banking sector could not have been more resilient, at least compared to the pre-reform era; and the bank has been very transparent about the fact that post-reform the banking sector has proven itself very resilient, especially in the face of the pandemic. The post-clean-up banks have been the key players in helping to stablise our economy,” she said.
“We have seen a consistent improvement in the asset quality of banks; there are still non-performing assets, but we are comparing a ratio of about 15 percent in November 2020 to upward of 20 percent as at December 2018. This is thanks to our increased emphasis on strong corporate governance within the banking sector,” she added.
Mrs. Awadzi stressed the central bank’s commitment to the financial sector’s sanctity, with special concern for depositors’ funds.
She added it is ironic that owners of banks, who were often complicit in giving loans without regard for due process – often to their affiliates, would imply they are being persecuted; when in reality those bearing the brunt were unsuspecting depositors whose funds and trust were being abused.
Echoing some of the sentiments expressed by the Deputy Governor, President of the Ghana Association of Restructuring and Insolvency Advisors (GARIA), Felix Addo, praised the BoG for timely measures it implemented with the advent of COVID-19 – which he argued made banking systems even stronger.
Some of these steps include the halting of dividend payments, and reduction in capital adequacy buffer for banks from 13 percent to 11.5 percent. “From an outsider’s position looking in, I can assure you that the Bank of Ghana took immediate steps; and these have helped us withstand the COVID-19 stress,” he said.