Government Closes Down Two State-Owned Banks

Accra, Ghana (PANA) - The Ghana government and central bank officials have been in intensive discussions since Monday on the future of the Bank for Housing and Construction and Co-operative Bank, which have been liquidated following heavy losses, official sources said.

The government has, meanwhile, approved a scheme to protect depositors of the two banks.

Sources at the bank and the finance ministry told the national news agency that the governor of the central bank and government were holding discussions on the matter.

"We need to sort a few matters before coming out with a statement," a source at the bank said.

Government Monday closed down the two banks and ordered all customers and staff except branch managers and accountants to stay away.

Meanwhile, under the scheme to protect depositors, they will be required to submit their rights to claims to government and in exchange have their deposit balances transferred to Agricultural Development Bank or Ghana Commercial Bank Limited.

A notice to depositors dated 17 January posted at the national headquarters of the Co-operative Bank explained that the bank had been liquidated because of "consistent losses resulting from deterioration of their loan portfolio."

It said the liabilities of the bank exceed its asset and this has affected its ability to satisfy the capital adequacy and minimum capital required under the banking law.

The two banks had been weighed down heavily by the A-Life Supermarket scandal in which the owner fleeced several banks of some 120 billion cedis.

The financial sector was rocked a few years ago with the crash of some "Miracle Banks" such as Pyram and R5 emerged promising fantastic interest rates.

The central bank ordered their closure and they eventually collapsed bringing down with them thousands of depositors, who had lodged billions of cedis with them. Nothing has happened to their owners.

The Bank for Credit and Commerce also collapsed and foreign currency depositors are yet to be paid all their deposits.

The Social Security and National Insurance Trust bailed out Meridien BIAO, when it went bankrupt. The bank is now called The Trust Bank.