Financial experts are asking the Bank of Ghana (BoG) to take action on shareholders and directors whose actions or inactions have left their institutions in distress.

They believe the time has come for more stringent steps to be taken against these people because until someone is used as a scapegoat, the crisis in the banking sector will see no end.

Their call comes just a day after five banks – Beige bank, The Royal Bank, uniBank, Sovereign Bank and Construction Bank – had their licenses withdrawn and merged into the Consolidated Bank Ghana Limited.

These banks, Governor of the BoG, Ernest Addison said had come to a point where they could not be salvaged, hence the decision to consolidate them.

In the case of uniBank, Dr Addison disclosed that unscrupulous activities by shareholders, directors and related parties cost the bank some GH¢5.3 billion.

This amount, totaling 75 percent of the bank’s assets were disbursed in the form of loans and advances without due process.

News about the consolidation will however not come as a surprise to many Ghanaians as it became apparent since last year that these banks will struggle to remain solvent after the BoG announced its new GH¢400 million capital requirement for banks.

Five Managing Directors of the dissolved banks: L-R: Stephen Kpordzih (Construction Bank) Osei Asafo - Adjei (Royal Bank) Dr Duffuor II (uniBank), Johan Rheeder (Royal Bank), Mike Nyinaku (Beige Bank)

Capital Bank and UT Bank were the first to go down, and activities of directors and shareholders were said to be a contributing factor to the collapse. Until now, however, no punishment whatsoever has been handed them.

Chief Executive Officer of Dalex Finance, Ken Thompson is unimpressed with this development.

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He is appalled that no one has yet been held legally responsible for the collapse of the banks and hoped that the latest development will cause the BoG to sit up.

“Let us not underestimate how serious this matter is. GH¢5.3 billion is over 10 percent of Ghana’s budget, and we’re going to the Chinese cup in hand for GH¢20 billion…that is nearly 25 percent of the money we are desperate for.

“And unless the people that are culpable are prosecuted, we might as well not have started. We’ve got to set an example which will be the foundation for the development of this country... the Governor has to prosecute those who are culpable,” he added.

Mr Thompson also wants the regulator and auditors of the collapsed banks punished.

He believes that the struggles of the banks should have come to them if they were doing their jobs as expected of them.

“Where were the regulators, who are their auditors, who went on the reviews, who were their tax inspectors,” he queried adding “these issues have to be dealt with quickly, promptly, decisively, because it affects those of us who are trying to do the right thing.”

Leaving things as they are, he noted is a bad example for the whole country and undermines prosperity.

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“You cannot take taxpayers money and give to your wife and children, it is wrong. Fundamentally it should not happen.

“We have to do things right, we are setting an example for our children, for institutions and this impacts on the governor’s own career and how people perceive us externally. It has huge significance,” he stressed.

For him, the Governor has failed unless he prosecutes the perpetrators of these hideous acts.

Financial Analyst and Consultant, Sydney Casely-Hayford agrees with the Dalex CEO and is unhappy with the BoG.

He believes the situation in the banking sector has been raging for a while, and some of these actions – mergers – should have taken place long ago.

“If this had been done a while back, we would have probably had a lot more sanity in the banking system and a lot more lending into the private sector in order to keep the economy buoyant,” he said.

Mr Casely-Hayford also called for an examination of certain players within the banking supervision unit of the BoG, and “the bank has to do its internal review and clean out all the bad nuts that were there.”

“Those people must be identified and prosecuted, he said adding that the BoG has the power to identify and should know when their being lied to and take action.

He also alleged that the BoG was very much aware of the situation of these struggling banks but turned a blind eye.

He could not give specific details but said “I have seen one or two banking supervision reports that I thought were not acted on when they should.”

Going forward, however, Mr Casely-Hayford wants more bank mergers and collapses – especially those that cannot meet the capital requirement – but advised the BoG to be resolute and insist that all its measures are adhered to.

“And regulation has to be toughened and adhered to and we must make sure that we have the right persons at the top of departments in order to make sure that we have sanity and integrity.”