Blame Gov’t for Collapsed Banks – Ato Forson

Cassiel Ato Forson, Former Deputy Finance Minister, has blamed the ruling government for the collapse of some five local banks.

According to him the collapse of the banks is as a result of government’s refusal to pay workers their wages.

“People have worked at the cocoa sector, they needed to be paid [because] they have done the job, they had gone to the banks for loans [but] because of politics no one wants to pay them; this is what we will see. If you have worked at the District Assembly, worked at GETFund, worked at Road Fund and nobody wants to pay you as a result of capping or, in quote, tagging, what happens? This is what we will see. So, I will not say it is because of legacy problems, it is because of policies that this government is implementing,” he told Accra-based Joy FM on Thursday, 2 August 2018.

His comment comes in the wake of the merger of The Royal Bank, BEIGE Bank, Sovereign Bank, The Construction Bank and uniBank by the Bank of Ghana (BoG).

The resultant bank is called Consolidated Bank Ghana Limited.

Governor of the BoG, Dr Ernest Addison explained on Wednesday, 1 August 2018 that the move was part of measures to streamline the financial sector.

However, the Ranking Member on the Finance Committee of Parliament says government is to blame.

He continued: “If you decide to cap all statutory funds, if you decide to say that you are not paying contractors, this is what we see. I know the IMF never said anywhere that the capitalisation should be GHS400 million, in fact when we engaged the IMF, they said the GHS400 million, they think is even far-fetched… But that is the decision of government. I know the IMF requested for the asset quality review test and for us to be able to evaluate the banks that are in distress positions and those that are not in distress positions”.

Meanwhile, Investment banker Iddrisu Mahama Alhassan, has said he is not surprised about the collapse of the five local banks.

Speaking on Class91.3FM’s Executive Breakfast Show on Thursday, 2 August, Mr Iddrisu Alhassan told Moro Awudu that: “What has happened is not surprising.”

“At least, having been involved in raising capital for three, four or five of them; and people come, they look at the paper report, they are OK. They go into the software and it gets sick, and you can see that even the capital that is reported and you prepare a certain memorandum and do all the things that you’re supposed to do and you say for due diligence let’s do some one or two checks, and then you go inside, the money is not even there and we are like: we are not interested in this and we have tried four, five banks and it wasn’t possible.

“We’ve seen other colleagues who have mandates and we say: OK, let me see what they have, you flip through and you don’t get encouraged to go and look for the money.

“That was when I realised that the Bank of Ghana hasn’t finished and they’ve proffered merger of the banks and everybody is looking at the other private business that he’s doing that is linked to the bank.

“And, so, when they are talking about mergers, they are not talking about who sits as the MD, they are actually thinking about what they will lose if they merge. And I keep telling people to tell the other partner that ‘this is the business I do in the bank’; will it be possible when we consolidate? But everyone is keeping his secret in his bag because he thinks that if one knows … but the central bank knows. And I’m not surprised and I thought that even with this news, the central bank hasn’t finished”.