Adongo accuses BoG of Deliberately Collapsing Banks

The Bank of Ghana’s merger of five local banks is deliberate to collapse huge local banks, the Member of Parliament for Bolgatanga Central has said.

According to Isaac Adongo, the merger was highly unnecessary and is in bad taste for fledgling indigenous banks.

Announcing the move, the governor of the Central Bank Ernest Addison said, “To help ensure that the banking sector maintains a strong indigenous presence, the government has established a new bank called Consolidated Bank Ghana Limited which will act as a bridge bank pursuant to section 127 (11) of Act 930, to assume some of the assets and liabilities of the five banks. The Government has capitalised the new bank in the amount of GH¢450 million and the Bank of Ghana has issued it with a universal banking licence with effect from 1st August 2018.”

The Central Bank, he further stated “has also approved a Purchase and Assumption Agreement between Consolidated Bank and the Receiver for the five banks. Under the Agreement, Consolidated Bank has acquired all deposits and other specified liabilities, and good assets of the five banks. To finance the gap between the liabilities and good assets assumed by Consolidated Bank, the Government has issued a bond of up to GH¢ 5.76 billion.”

The Consolidated Bank is expected to assume the branches and staff of the five banks and will operate its head office from the Manet Tower C, Airport City, Accra.

However reacting to the move, MP for Bolgatanga Central, Issac Adongo, said the explanations coming from the Central Bank do not add up.

According to him, the Bank of Ghana is deliberately collapsing local banks “in order to manage expectations of players in the industry.”

“You have KPMG write a letter that indicates that there is a hole of GH¢5.7billion in Unibank alone. The governor of the Central Bank announces that the government has issued a bond of GH¢5.6billion,” Mr. Adongo told Accra-based Starr FM.

“What it means is that that GH¢5.6billion is not even enough to cater to Unibank. So, what is the hole in Beige bank? What is the hole in Construction Bank? What’s the hole in The Royal Bank? So cumulatively, what’s the deficit we are looking at? So, what are you merging? Empty bank, with serious liquidity gap without any funding?

“So clearly…this is an administration in disguise announcing the fiscal cost of dissolving these banks in order to manage expectations of players in the industry. And I want to tell you emphatically, a culmination of regulatory collaboration to bring bigger industry players on their knees,” he added.