Contrary to claims by Vice President Dr Mahamudu Bawumia that bailing out ailing banks through liquidity is no more the way to go in strengthening the banking sector, the Member of Parliament (MP) for Bolgatanga Central Constituency, Isaac Adongo says the Nana Addo led administration is still bailing out some banks by offering them liquidity support.
Ghana’s minority accuses Bank of Ghana of ‘secretly’ bailing out some liquidated banks
The minority in Parliament and the largest opposition party, the National Democratic Congress (NDC) has accsed the Bank of Ghana of bailing out some banks by offering them liquidity support.
Recently, the Bank of Ghana (BoG) revoked the licences of nine universal banks, 347 microfinance companies of which 155 had already ceased operations, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions. The move was part of its clean-up of the financial sector which began in August this year.
BoG said the clean-up became necessary due to the risk weaknesses in the financial.
The BoG further maintained that bailing the companies out as was done under the previous administration was not a prudent way to deal with the situation.
But the NDC MP who doubles as a member of the finance committee of parliament said liquidity support is still being giving out to some banks.
“Since 2017, and as late as 2018, Bank of Ghana has been injecting a lot of liquidity support to ailing banks, including so-called recapitalised banks after wasting GHc21 billions of taxpayers money on collapsing banks,” he told Accra based Mynewsgh.
Mr Adongo added that “In 2018, GCB received in excess of GHc1billion of liquidity support from BOG. In the last quarter of 2018, BOG lent over Ghc3.6 billion in liquidity support to CBG after spending over GHc8.05 billion on this same bank through paid-up capital (GHc450 million) and corporate bonds of (Ghc7.6 billion) to be paid by the taxpayer.”
He intimated that despite the collapse of some banks for failing to meet the minimum capital requirement of Ghc400 million, coupled with other financial institutions' management breaches, the central bank under the current governor is still extending huge sums of liquidity support to banks.
Meanwhile, BoG data has shown that customers are now reposing confidence in the banking sector for first-half of 2019 following the banking sector clean-up.
The data showed that bank deposits increased by 22.3% to GH¢75.57billion by end of June 2019.
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