The flagbearer of the New Patriotic Party (NPP), Dr. Mahamudu Bawumia, has described the near-collapse of Ghana’s banking sector as one of the most challenging moments of his tenure.
Speaking at a Media engagement on Sunday, August 25, Dr Bawumia detailed the gravity of the crisis and the decisive actions taken by the government to avert a complete collapse.
He emphasised that the government did not simply allow the banks to fail but instead facilitated mergers with more stable institutions, ensuring that no depositor lost any funds. Dr. Bawumia also pointed out the reckless behaviour of some banks, including excessive lending and the misuse of funds provided by the Bank of Ghana.
“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 what happened in the banking sector. Some outrageous things happened and this is why these banks had to be saved. They did not collapse, they were merged into other banks and no banking depositor lost GHc1.00. Everybody maintained you had very bad things happening.
“Some of the banks broke all the rules and extended loans way above the single [obligor] limit. They were given, in some cases Ghc1 billion by the Bank of Ghana to help them out of the mess, yet they got deeper into the mess. Another bank was given capital to save the situation, it was given money from the Bank of Ghana’s Lenders of Last Resort facility and they used that money to go and set up Capital Bank. Instead of securing the problem that they had, they took the money from the Central Bank and went to set up another bank which also collapsed.
“Some took money and went to invest in private properties. So, it was against this background when the governor came to report and this was one of my nightmares for the last eight years. I couldn’t sleep that night… Most people didn’t understand how close we were to the collapse of the entire banking system; we were this close.
“Because all it could have taken was for a few depositors to go to UT Bank and they will tell you there was no money. What would happen, there would have been a complete run on the banking system in Ghana,” he stated.
