Cleanup of financial sector responsible for current economic stability–BoG

The Bank of Ghana (BoG) says the current financial stability being experienced in the country is as a result of the prudent way it undertook the financial sector clean.

Between 2017 and 2019, the central bank embarked on an exercise that saw over 420 financial institutions including banks, microfinance companies, as well as savings and loans companies among others been collapsed.

Some financial observers have criticized the Bank of Ghana for the way it carried the exercise citing the number of jobs that were loss.

But addressing journalists at a press soiree on Friday, the First Deputy Governor of the Bank of Ghana, Dr. Maxwell Opoku Afari insisted that the central must be applauded for the tactical manner in which the financial sector clean was done.

Citing some European countries as an example, Dr. Opoku Afari explained that it is very difficult resolve a financial institution in a developing economy but the central bank managed to revoke the licenses of over 400 institutions that did not meet the BoG requirement and still maintained financial stability.

“In my previous assignment with the IMF, even resolving one institution in an advance economy could create a whole lot of crisis. You can go to Europe and look at Portugal and other countries and what they went through, and that was as a result of one institution”.

He maintained that the financial sector cleanup was crucial for the sustainability of the country’s economy to stimulate growth.

Financial sector reforms
The financial sector cleanup which started in August 2017 has cost the country 14 billion cedis.
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 impairment of their capital.

In August 2018, the Bank of Ghana consolidated five other local banks into what it calls the Consolidated Bank Ghana Limited.

The Bank of Ghana in a statement on January 4, 2019, following the expiration of the minimum capital requirement deadline, said all the 23 remaining banks have met the new minimum paid-up capital of GHS400 million.
347 microfinance companies also had their licenses revoked by the Bank of Ghana in May 2019.

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