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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.
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By: Nii Larte Lartey/citinewsroom.com/Ghana

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