BoG partners state agencies to prosecute culprits in collapse of financial institutions

BoG partners state agencies to prosecute culprits in collapse of financial institutions

Dr. Ernest Addison - Governor, BoG

The Bank of Ghana’s Governor, Dr. Ernest Addison, has expressed reservations over how processes for the prosecution of officials found culpable in the banking sector crisis are being handled.

He says although the regulator of the banking sector has no control over judicial processes, it is, however, collaborating with the relevant state agencies to ensure that justice is served. Dr. Addison made the comments when he appeared before the Public Accounts Committee of Parliament.

“In terms of the processes, we wish that it could have been faster. But I think that we are working on it. We are supporting the Attorney-General’s Department with some materials to help them prosecute shareholders and directors that are culpable,” he said.

The Bank of Ghana, between 2017 and 2019, revoked the licenses of nine local commercial banks and over four hundred financial institutions comprising Micro-finance, Savings and Loans as well as Finance Houses, for violating various regulations controlling their operations.

The move affected about 4.6 million depositors whose monies could have been completely lost if not for actions taken by the Bank of Ghana (BoG)

As a result, the Finance Minister, Ken Ofori Atta announced that the clean-up exercise cost the country US$4 billion, an equivalent of about GH¢21 billion.

How did it start?

In August 2017, the Bank of Ghana (BoG) gave GCB Bank Ltd the green light to acquire two local banks UT and Capital bank due to severe weaknesses in their capital.

Later in August 2018, the Bank of Ghana consolidated five other local banks into the current Consolidated Bank Ghana Limited (CBG).

Later in May 2019, a total of 347 microfinance companies also had their licenses revoked by the Bank of Ghana.

Also the Securities and Exchange Commission (SEC) in November 2019 revoked the licenses of 53 Fund Management Companies.

According to SEC, in a statement, explained that the action was taken in accordance with Section 122 (2) (b) of the Securities Industry Act, 2019 (Act 929) which authorizes SEC to revoke the license of a market operator under some circumstances.