Economist Prof. Stephen Adei has said Ghana is currently going through an economic crisis partly because the Akufo-Addo-led government used GH¢21 billion to collapse some nine banks and other financial institutions.
Some nine local banks, 23 savings & loans companies, 347 microfinance institutions, 39 finance houses and 53 fund management companies have been closed down since 2017 under President Nana Akufo-Addo in a financial sector clean-up exercise.
Two banks,UT Bank and Capital Bank, were first taken over by GCB Bank in a purchase and assumption agreement.
Seven others, the Sovereign Bank, The Beige Bank, Premium Bank, The Royal Bank, Heritage Bank, Construction Bank and UniBank had their licences revoked and placed under the Consolidated Bank Ghana.
In an effort to overhaul and stabilise the banking sector, the Bank of Ghana revoked the licences of nine Ghanaian banks and one was downgraded to savings and loans institution which later folded up summing up to ten banks.
Report says the effects of the collapse banks on customers. Using a quantitative approach, the study revealed that the collapse of the banks had major impacts on customers including loss of capital, disincentive to do further savings, inability to pay creditors and a general decline in the capacity to handle needs including educational plans.
In addition, the study established that the most affected customer category was current account holders. Among others, the study recommends that the Bank of Ghana should be cautious in handing distressed banks, and also encourage self-regulation among banks mainly through the Bankers’ association. It is also recommended that over ambitious branch network expansions should be scrutinized regularly by the Central Bank.
As part of the governance framework, universal banks should also put in place mechanisms to monitor and sanction both internal and external auditors when their works fall below expectations.