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General News of Thursday, 25 June 2020


Consolidation of banks Akufo-Addo's biggest legacy – Ken Agyapong

Kennedy Agyapong, MP, Assin Central play videoKennedy Agyapong, MP, Assin Central

Kennedy Ohene Agyapong says the banking sector clean-up and subsequent consolidation of the banks is President Nana Addo Dankwa Akufo-Addo’s best achievement in office.

He contends that the reforms in that sector is shoulders above the much-touted Free Senior High School programme.

“...the 10 commandants of Akufo-Addo; the first one is the consolidation of the banks and reinjection of capital [into] the Ghanaian economy,” Agyapong told Paul Adom-Otchere when he appeared on Good Evening Ghana last Tuesday.

According to him, some ignorant people want to score cheap political points by emphasizing that about 3000 people lost their jobs during the banking clean-up.

The outspoken member of Parliament argues that the job loses, although regrettable, was for a greater good.

“If Akufo-Addo had not come in and save these banks, 4.6 million depositors would have lost their money. Can you compare 4.6 million depositors to [the] 3000 people we’re talking about?” he quizzed.

“...any economy without the backing of the banks will collapse. To appreciate what President Akufo-Addo [has] done, look at Venezuela, Lebanon. In Venezuela, you have your money in the bank but you can’t get it; Lebanon, money in the bank they can’t get it. A millionaire went to the bank just to take about five or ten thousand dollars to buy a business class ticket, he was refused,” Kennedy Agyapong explained.

He added that Ghanaians should “applaud Akufo-Addo and Ken Ofori-Atta for what they have done for this country.


As part of its efforts to restore confidence in the banking and specialized deposit-taking sectors, the Bank of Ghana embarked on a clean-up exercise in August 2017 to resolve insolvent financial institutions whose continued existence posed risks to the interest of depositors.

A comprehensive assessment of the savings and loans and finance house sub-sectors carried out by the Bank of Ghana in the last few years, identified serious challenges (see Annex 2), summarized as follows:

The levels of capital held by some savings and loans companies and finance house companies were in violation of the minimum regulatory capital required by Act 930. This made it precarious for these institutions to continue to undertake the business of specialised deposit-taking institutions, given the risks they posed to their depositors and other counterparties to whom they were exposed directly or indirectly; Excessive risk-taking without the required risk management function to manage risk exposures;

The use of depositors’ funds to finance personal or related-party projects or businesses on terms that were not commercial, leading to little or no income accruing to the relevant savings and loans companies or finance house companies and thereby compounding their liquidity challenges;
Corporate governance weaknesses with weak Board oversight, poor accountability, and override of internal controls;

Creative accounting practices and under-provisioning for impaired assets, thereby misrepresenting their true financial condition to the Bank of Ghana and other stakeholders; and Persistent regulatory breaches, involving non-compliance with Bank of Ghana’s prudential rules, and failure to implement Bank of Ghana on-site examination recommendations.

All efforts by the Bank of Ghana to get the shareholders and directors of the affected institutions to rectify the above lapses, especially the significant capital deficiencies, yielded no positive results. Consequently, the financial position of these institutions has continued to deteriorate, leading to their insolvency with some of them ceasing operations and closing their offices to depositors whiles those currently in operation are unable to pay depositors and other creditors at all or fully.

Given the risks that these institutions continue to pose to the entire financial system and the need to protect the interest of depositors, the Bank of Ghana is sanitizing this subsector through the orderly resolution of the failed institutions in accordance with Sections 123 to 137 of Act 930.