Banking clean-up helped to prevent collapse of financial sector – Bawumia

Vice President Dr. Mahamudu Bawumia says the banking sector clean-up exercise was necessary to rescue Ghana’s banking system from a total collapse.

Dr. Bawumia, during an engagement with the clergy in the Northern Region, disclosed that the government had to make the difficult decision of allocating GH¢25 billion toward revoking the licenses of 420 banks and specialized deposit-taking institutions to safeguard the deposits of over 4.6 million depositors.

He argued that this singular decision also preserved numerous jobs.

“One of the biggest nightmares I had was that it was clear that if we didn’t move, move to rationalise the banking system and shut down some of these banks, the whole system was going to collapse. So we had to find GH¢25 billion to save the banking system, and we saved the deposits of 4.6 million depositors by just moving their deposits to new banks like the Consolidated Bank. Otherwise, they would have all collapsed, and we would have lost so many jobs.”

He, however, clarified that some individuals may still encounter challenges in retrieving their locked-up funds due to the nature of the businesses or companies where they invested their money.

“For some of the securities like Gold Coast Securities and so on, these were investments that were made by people and not bank deposits and people basically make their own evaluations of the risks involved when investing in certain institutions. Sometimes, when they make a lot of money, you don’t hear complaints but when they lose money then we may hear some complaints.”

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