FINANCIAL analyst and Member of Parliament for Bolgatanga Central, Mr Isaac Adongo, has taken aim at the government and the Ministry of Finance for setting local banks up for failure by failing to pay debts owed them and not announcing a stimulus package that can be used to resuscitate them.
With less than two weeks to the end of the December recapitalisation deadline, Mr Adongo said BoG needed to work with the Minister of Finance to prioritise the payment of contractors and service providers owed by the government to banks yet to meet the capital.
This, he said, would assist these banks to restate their capital impaired by non-performing loans.
“An audit commissioned by the Minister of Finance into exposure of GN Bank and Gold Coast Securities in respect of government projects due for payment amounted to GH¢2 billion.”
“Prioritising these payments will immediately strengthen the bank’s liquidity and also reduce significantly the amount they require to meet the minimum capital,” he told the GRAPHIC BUSINESS on December 16.
“It will be a travesty of Justice for the owners of these banks to lose them because the government has not paid its obligations to their customers,” he added.
On December 6, the Association of Road Contractors (ASROC) said government’s indebtedness to their members had totalled GH¢2.9 billion by October this year.
The MP also repeated his earlier stance that the central bank extends the recapitalisation deadline for local banks that have strong corporate governance structures and genuine roadmaps that would lead to the realisation of the GH₵400 million capital after December 31.
“The governor should not still be telling us people’s money are safe and that we have a strong banking sector. He should now be telling us how he will save the local banks that have a genuine roadmap,” he stated.
Mr Adongo also urged the government and the BoG to institute an equity based stimulus fund to invest in the remaining local banks yet to meet the minimum capital in order to save the tax payer another huge pay out to resolve or consolidate these banks.
“A clear policy must be rolled out to encourage the existing banks that are not meeting the minimum capital to merge and be allowed to tap into this stimulus fund,” he said.
‘Drama’ around adb/NIB
Mr Adongo also called for an end to the ‘drama’ surrounding the recapitalisation of adb Bank and the National Investment Bank (NIB).
He said the minister of finance must act now to recapitalise them immediately and stop making comments aimed at further weakening NIB.
“After refusing to take action to address the recapitalisation of these Bank's for almost a year now, the Minister of Finance should not be creating an impression that we are in an emergency situation in their recapitalisation,” he said.
He also urged the President to redeem his promise to the association of local banks that petitioned him in April 2018.
“He promised to set up a 10-member committee made up of representatives from BoG, Ministry of Finance and the Office of the President to report to him in two weeks to enable him to announce and implement his government’s support to the local banks. It's been 8 months since he made the promise without any announcement and support to the local banks,” he pointed out.
“With just about two weeks to the deadline, I entreat the President to redeem his promise and save these Banks. He should not supervise the collapse or consolidation of any more local banks,” he added.
Liquidity situation of CBG, GCB
The Member of Parliament also called for the immediate resolution of the liquidity situation at CBG Bank and GCB Bank resulting from the resolution and consolidation of the seven defunct banks.
He said the government must engage the BoG to convert the bonds that had been issued to these two banks into liquid assets.
“This will immediately release GH¢9billion liquidity to these Banks to enable them to meet their obligations to the customers and restore confidence in the banking sector,” he stated.
He said financial institutions such as savings and loans, micro finance and fund management companies were facing panic withdrawals because of their funds being locked up at CBG Bank and GCB Bank making it difficult for them to pay their clients demands.