John Dramani Mahama, the flagbearer of the National Democratic Congress, has come under fire from the New Patriotic Party (NPP) for his pledge to reinstate the licenses of certain financial firms that have failed.
At the NDC manifesto launch at Winneba, Mahama pledged to reinstate the licenses of financial firms that he claimed the NPP government had unfairly closed.
Dr. Bawumia, however, expressed surprise at Mahama’s position at a media appearance, claiming that the NPP’s actions preserved the deposits of 4.6 million bank clients who would have lost money if the institutions had not stepped in.
He clarified that certain institutions had committed heinous acts, like lending money beyond what was permitted, mismanaging funds, and making investments in private real estate.
Dr. Bawumia emphasized that in order to avert a systemic crisis, certain banks had to merge since the banking industry was in danger of collapsing.
Before he could say anything further, he suggested that Mahama study the reports from the Bank of Ghana and the Receiver to gain a better understanding of the issue.
“We saved the deposits of 4.6 million bank depositors who really were going to lose their deposits if those banks were not saved. I don’t understand whether the former president has taken his time to understand the banking sector. Some atrocious things and this is why these banks had to be saved.
“They were not collapsed, they were merged into other banks and no banking depositor lost 1 cedi, everybody maintained. But very bad things happened, some of the banks broke all the rules and extended loans way above the single obligor limits.”
“They were given, in some cases 1 billion by the Bank of Ghana to help them out of the mess and they only got deeper into the situation. Other banks were given capital to save the situation, and they used that money to set up Capital Bank, instead of rescuing the problem that they had. They took the money from the central bank and set up another business which also collapsed. Some took money and invested in private properties.”
“So, it was against this background the governor came to report, and this was one of my nightmares in the last eight years. Most people didn’t understand how close we were to a collapse of the entire banking system. This is how we had to merge many of these banking sectors into other banks and we saved 4. 6 million depositors.”
“I’ll ask the former president if he hasn’t read, to go and read the receiver’s report or the BoG’s report and acquaint himself before making any further comments on matters he clearly doesn’t understand.
Before speaking further, he must get their understanding. Additionally, he is unable to give them the license of a bank because this is a matter of legal procedure.
