GHS 25bn financial sector clean-up described as “protective measure” against Covid impact, current economic crisis

Chief Executive Officer of the Ghana Association of Banks, John Awuah, has described as a ‘protective measure’ the banking sector clean-up exercise embarked on by the Bank of Ghana in safeguarding the stability and functionality of the financial industry against the adverse economic impacts of the Covid-19 pandemic and the current economic crisis facing the country.

Making the assertion during an interview on PM Express on Thursday, Mr Awuah, emphasised the significant contribution of the banking sector to Ghana’s successful negotiation of an IMF-assisted programme, asserting it would have been impossible do achieve that, had the sector not been resilient enough.

According to him, the resilience of the banking industry following the clean-up exercise served as a critical shock absorber for the economy.

“The banking sector clean-up provided a shock absorber for the industry, and that perhaps is the key enabling force that helped the banks to come through these difficult periods that we’ve had,” he quipped.

The clean-up saw a reduction in the number of banks from 34 to 23, whilst 347 microfinance institutions, 15 savings and loans, and eight finance houses had their licences revoked.

While some of the commercial banks were merged to form the Consolidated Bank Ghana Limited, state-owned GCB was allowed to acquire two other indigenous banks namely Capital Bank and UT Bank.

The Securities and Exchange Commission (SEC) also announced the revocation of the licenses of 53 Fund Management Companies.

A number of these institutions were found to have varying degrees of corporate governance lapses.

The state’s fiscal intervention in the sector clean-up is estimated at GHS 25bn.

Source:norvanreports