Skip to main content

Banks collapse: BoG failed in supervision – Economist

Prof.-Godfred Bokpin
Economist, Prof. Godfred Bokpin has said that, the Bank of Ghana (BoG) is to blame for the woes of banks in the country.
Ghana is currently experiencing a period of banks’ struggles with many analysts calling for pragmatic measures to address the issue.
Speaking on Eyewitness News  on Wednesday, Prof. Bokpin indicated that, the BoG must take full responsibility of the crisis in the banking industry.
On August 1, 2018 the BoG consolidated five local banks; Beige Bank, Construction bank, Royal bank, uniBank and Sovereign bank into what it calls the Consolidated Bank Ghana Limited.
According to the Governor of the Bank of Ghana, Dr. Ernest Addison, some of the banks obtained their licenses through false means by presenting documents that painted a picture as though they could meet the new capital requirement.
In 2017 also, the central bank revoked the licences of UT and Capital Banks because the liabilities of the two banks overwhelmed their assets.
But, Prof. Bokpin said he was not surprised at the current turn of events because the central bank had failed in its due care in terms of regulations.
“We are not completely taken aback. They (BoG) have given us the cause to blame them justifiably so. There is enough admission in their own statement about the lapses that were orchestrated from the central bank of point of view and therefore they can not to say or portray that they are innocent in this matter”.
Prof. Bokpin who is also the Head of the Finance Department at the University of Ghana Business School revealed that given the magnitude of the transactions and the interrelated parties involved in the deals, it would have been strange for the central bank to say it knew nothing about it.
“So the honourable thing to do which I think they have done, is to admit that they were complicit somewhere along the line. The Central bank is to be blamed also”, he intimated.
How BoG’s weak supervision resulted in Capital, UT Banks’ collapse
It has emerged that the Bank of Ghana failed to enforce its regulations in granting licenses and supervising the operations of two local banks, UT and Capital Bank.
The report, available to citinewsroom.com indicated that the Bank of Ghana was complicit in the wrongful issuance of banking license to Capital Bank.
“A review of the issuance of a banking license to Capital Bank reveals complacency or complicity on the part of the BoG. During the application stage, the Capital Bank shareholders produced evidence of only GH¢23.2 million liquid investments and GH¢ 51.5 million illiquid investments.
The report indicated that the said funds that shareholders claimed were theirs were never transferred to the bank and although the attention of the Bank of Ghana was drawn to the situation, the BoG failed to sanction Capital Bank.
“The new funds were never transferred to the Capital Bank. In fact, the Capital Bank management began to refer to it as ‘re-engineered capital.’ This was brought to the attention of BoG, but again, there is no evidence of sanctions to either the institutions concerned or the individuals in senior management and on the Board of Directors.”
Capital Bank’s CEO signature allegedly forged to divert funds – Report
There may be an instance of fraud in the suspected misuse of liquidity support given Capital Bank by the Bank of Ghana (BoG), according to an investigative report sighted by Citi News.
The report noted that the then-Capital Bank CEO, Rev. Fitzgerald Odonkor may have had his signature forged in the authorization of certain deals related to the GHc 610 million liquidity support to the doomed bank.
The management of the Bank, with the approval of the Board Chair, diverted some of the BoG support or other uses.
Some of that money was presented as capital to set up another collapsed bank, Sovereign Bank.
_
By: Nii Larte Lartey/citinewsroom.com/Ghana

Comments

Post a Comment

Popular posts from this blog

Ghana-Northern Region Trade Fair 2017 launched

The Northern Region Office of Ministry of Trade and Industry (MoTI) is to organize the Northern Trade Fair 2017 to showcase emerging opportunities in the region for business to take advantage of. The event, scheduled for October 10 to October 14, 2017 is expected to bring together over 500 entrepreneurs, craftsmen, manufacturers, producers, service providers amongst other stakeholders to market their wares. It is being organized by MoTI in partnership with Universal Marketing Consultancy Limited and Dansyn Ghana Limited on the theme: “Harnessing the Emerging Business Opportunities in the North for Economic Development through Trade and Commerce.” Alhaji Alhassan Issahaku, Northern Regional Coordinating Director, who launched the event in Tamale on Wednesday, said “the region has a lot of potentials which businesses can exploit and we are positioning the private sector to take advantage and grow their business.” He said the fair formed part of efforts to repositi...
Post a Comment
Read more

Bank loans to fall due to new minimum capital requirement

The rise in the minimum paid up capital for commercial banks will further restrict lending to the private sector at least within the short to medium term. The development should be expected due to the operations of commercial banks which have limited the amount of credit offered businesses. The caution comes on the back of the increase in banks’ minimum capital from 120 million cedis to 400 million cedis. Commenting on the issue, a Credit Consultant, Emmanuel Akrong also indicated that banks risks reducing their income streams with this plan. In his view, the restriction in credit to businesses is also likely to adversely affect the larger economy. “At the moment, if you look at how banks are their deposits, they are putting more into government’s bonds and treasury bills than lending…so lending is not going to be low because of this new capital requirement but because of certain fundamentals which we need to fasten our seat belt about,” Mr. Akrong stated. The latest ban...
Post a Comment
Read more

International Monetary Fund (IMF), Ghana programme extended by a year

The International Monetary Fund (IMF) has extended Ghana’s program with the Fund. The extension will see Ghana end the program in April 2019 instead of April 2018. President Akufo-Addo during his maiden encounter with senior journalists at the Flagstaff House recently stated that government will not extend the programme after it ends on December 2018. However discussions between government officials and that of the fund in Washington yesterday led to an approval for an extension which was requested for by Ghana. The disbursement of 94.2 million dollars was also approved making it the fourth disbursement under the extended credit facility program.   A total disbursement under the arrangement is about US$565.2 million with the remainder to be disbursed after other reviews. The Board of the Fund also approved Ghana’s request for waivers of non-observance of performance criteria, and modification of one performance criterion; and the extension of the arrangement by one ...
Post a Comment
Read more