Accra, August 19, 2017//-Ghana’s President Nana Addo Dankwa Akufo-Addo has lauded the recent measures taken by the Bank of Ghana BoG in intervening decisively over the matters of UT Bank and Capital Bank.
According to him, the move was a demonstration of the Bank’s preparedness “to act in a manner worthy of a responsible Central Bank, and a praiseworthy regulator,” adding; “I am confident that you have the support of the nation.”
President Akufo-Addo gave the commendation when he opened BoG’s 60th Anniversary Lectures and Exhibition held in Accra yesterday.
The BoG on 14th August, 2017 withdrew the licenses of UT Bank and Capital Bank over severe capital impairment.
To this end, the BoG also approved a Purchase and Assumption transaction with GCB Bank Ltd that transfers all deposits and selected assets of UT Bank Ltd and Capital Bank Ltd to GCB Bank Ltd.
The remaining assets and liabilities will be realised and settled respectively through a receivership process to be undertaken by Messers Vish Ashiagbor and Eric Nana Nipah of PricewaterhouseCoopers (PwC).
The liquidation of the two banks became necessary in order to protect depositors’ funds owing to the “severe impairment” of their capital, the central bank said.
The liquidation formed part of prior actions agreed with the International Monetary Fund (IMF) ahead of the next review of Ghana’s three-year aid programme at the end of August.
Deposits at the two banks were safe and depositors would now become customers of the GCB Bank and they might continue banking at the UT Bank and the Capital Bank branch locations, according to the central bank.
President Akufo-Addo noted that the Bank had remained at the forefront in developing and deepening the financial market in Ghana and that it was of utmost importance for it to continue to fulfill that role and address all challenges.
The burden of maintaining stability is not that of the Central Bank alone but Government had a role to play.
“We are committed to the path of fiscal consolidation. We must do this so that the Bank of Ghana can concentrate on what it was set up to do. Persistent and excessive fiscal deficits get in the way of the Bank’s core mandate,” he said.
The President therefore stressed Government’s commitment to ensuring that Ghana’s overall fiscal deficit remained within a reasonable range of between three to five per cent, beginning from 2018.
The Government was also working assiduously to offset the huge energy sector-related debt that threatened the stability of the country’s banking system, he said.
On his part, the Governor of BoG, Dr Ernest Addison indicated that as part of their mandate to maintain financial stability, the Bank has embarked on a process to resolve some of the prevailing issues which threatens stability of the banking sector.
“Just this week, the Bank of Ghana revoked the licenses of two banks and approved a purchase and assumption agreement that allowed GCB Bank Ltd to take over the affected banks’ selected assets and deposits.
This, together with other prudential and supervisory measures introduced by the Bank of Ghana, is geared toward safeguarding the stability of the financial system and creating a healthy financial sector capable of supporting the transformational agenda of the Government”, he stressed.
Achievements
Dr Addison observed that a decade ago, the Bank launched a comprehensive programme to revamp the payment and settlement systems which is deemed critical for the transmission of monetary policy.
The Ghana Interbank Payment and Settlement Systems Limited (GhIPSS) was then established to implement and manage the payment system infrastructures for banks and non-bank financial institutions in Ghana.
Currently, GhIPSS manages the National Switch and Biometric Smart Card Payment System (E-zwich), the Cheque Codeline Clearing (CCC) and Automated Clearing House (GACH) systems.
“Today, our payment system infrastructure is among the best in the sub-region and we are gearing up to take it to the next level of interoperability which should unleash more innovative products and services and promote financial inclusion in the country”.
New strategies
He observed that the uncertainty in the global economy suggests that the Bank’s mandate of price and financial stability should be anchored on new strategies to strengthen monetary policy formulation to ensure macro stability and a healthy financial system.
The combination of which would unleash the full potential of the private sector to boost economic growth. As per the amended Bank of Ghana Act, 2016 (Act 918), the operational independence is still guaranteed and the central bank will continue to employ all tools available to achieve the mandate of price stability.
In its quest to maintain sanity in the financial industry, the Bank of Ghana, according to Dr Addison would continue to strengthen the licensing requirements, regulatory and supervisory frameworks of banks and non-bank financial institutions.
Together with other relevant stakeholders, we will work to build a stronger industry in a business-friendly environment by ensuring that banks have adequate capital to match their risk appetite, he indicated.
The Bank is fully aware of its overall institutional responsibility of developing an integrated financial system that can provide diversified range of products and services to support a dynamic growing economy.
As it marks this 60th Anniversary, therefore, the Bank commits to pursue this objective with professionalism and integrity, as the managers of the Bank lay another foundation for the next phase of central banking in Ghana.
Instructively, the Bank of Ghana was established on the 4th March 1957, just two days before the declaration of political independence. The country is also celebrating its 60th independence anniversary. Ghana is the first black African country to throw off the yoke of British imperialism on 6th March 1957.
By Masahudu Ankiilu Kunateh, African Eye Report