A flag bearer-hopeful of the opposition National Democratic Congress (NDC), Mr. Goosie Tanoh, has said the way and manner in which the Bank of Ghana intervened in the financial sector, vis-à-vis the collapse of seven local banks in one year, gave some people the impression that the regulator was witch-hunting one particular bank among the rest, due to its owner’s political affiliation – even though he refused not name that bank.
“I think people felt that one of the particular banks was [witch-hunted]. Because of the political [affiliation], it was being attacked”, the former aide to Flt. Lt. Jerry John Rawlings in the Provisional National Defence Council junta, told Good Evening Ghana host Paul Adom-Otchere on Accra-based Metro TV, stressing: “I don’t want to go into that; I have no desires to go into that”.
“The regulator must be impartial, transparent, and his remit is to correct what has gone wrong”, Mr. Tanoh emphasised.
Asked a direct question by host Paul Adom-Otchere if, in his opinion, Dr Kwabena Duffour, who served as Finance Minister in the Mills/Mahama administration, and erstwhile owner of now-defunct uniBank Ghana Limited – one of the five struggling local banks that were merged by the Bank of Ghana, into the all-new state-owned Consolidated Bank Ghana Limited (CBG) – was the target of the witch-hunting reference, Mr. Tanoh answered thus: “I think that there’s too much of this partisanship in this country; there’s too much nonsense in this country, we need to get rid of it and do the right thing”.
Apart from uniBank, the other component-banks of CBG include The Royal Bank, The Beige Bank, Sovereign Bank and The Construction Bank – all defunct.
A year before the collapse of the five, two others; UT Bank and Capital Bank, had been taken over by the state-owned GCB Bank with the blessing of the Bank of Ghana, which had declared them as “irredeemably insolvent”.
Mr. Tanoh, who is one of eleven flag bearer-hopefuls of the NDC, believes the Governor of the central bank, Dr. Ernest Addison, could have been a bit more discreet about the regulator’s intervention in the crisis, so as not to dampen confidence in the banking sector.
“You have to be careful how you intervene in these things, and when you intervene you must be impartial, and not witch-hunt.
“And I think people got the sense that some of this was a witch-hunt and so on, but down to brass tacks, the Bank of Ghana is the regulator, it has the fiduciary responsibility to Ghanaians, to the government, but basically to Ghanaians, to ensure that their deposits are safe.
“So, if it had to act in the manner that it did, it is correct under the law; what I would have liked is less publicity and more shoring up of confidence in the bank. Right now there is a loss of confidence in the bank. So, the way you do these things is important”, Mr. Tanoh told Adom-Otchere.
As far as he is concerned, the press engagements by the Governor of the Bank of Ghana in connection with the collapse of the seven banks, were “too much”.
“Quietly”, he said, “You move, you implement quietly so that you can restore that confidence that is lost, because the systemic risk is this Paul: If there’s a run on one bank, it’s a run on all banks because what happens is that banks lend to each other; banks lend to businesses, businesses have their deposits, people’s profits are coming in, so, once one is collapsing then you have that run.
“Look at what happened in the States – big banks like Citi Bank had to get money from the state, big companies like GM had to get money from the state, big insurance companies like AGI had to get money from the state; so, we have no doubt about the importance of the Bank of Ghana’s intervention, but the lessons are that the Bank of Ghana itself is complicit because they have regulators, there are accountants who passed these banks’ balance sheets and published them; that everything was safe, that the toxic assets were controllable, but they were not. We need to do these things properly, we need to have an early warning system, we need to have enhanced surveillance so that these things do not happen”, Mr. Tanoh noted.
In his view, “A growing economy … always has the risk that banks will overshoot themselves – it happens in China, it happens in the U.S., it happens everywhere – the important thing is that the regulator must be astute, keen, and on top of it; in this case they [Bank of Ghana] failed”.
Video Credit: Facebook/ Metro TV