“I think the Bank of Ghana is going about it the right way,” he said to Citi News after the BoG announced a thorough investigation of operations of UT Bank and Capital Bank.

[contextly_sidebar id=”40Qdu9MUp8iCaeT3myYed7M2hSPyHOop”]The central bank said appropriate action will be taken against shareholders, Directors, and key a Management personnel who are found to be culpable in the collapse of the banks.

Ensuring accountability in the wake of the collapse of these banks is the prudent next step, according to Mr. Thompson, given there has been some form of negligence.

“If for example, all the money has been lost because they invested it businesses that fail, that is fair. But if the money has been lost because of negligence then, of course, somebody has to be held accountable because it’s not right. You can’t take my money, squander it and then go away Scott free.”

“So I think that if individuals or institutions are found to be culpable or involved directly or indirectly in contributing to the Bank’s failure then I think they should be held accountable… if Dalex Finance collapses because I have taken investors money and put in my pocket, I should be held responsible and that is standard practice.”

Fallout from collapse

Deposits of customers of the two banks will be protected by the government as their takeover by GCB Bank is finalized.

The inability of the banks to turn around their negative capital adequacy position led to their collapse and necessitated a Purchase and Assumption agreement allowing GCB Bank to take over all deposit liabilities and selected assets of both UT Bank and Capital Bank, per section 123 of the Banks and Specialised Deposit-Taking Institutions (SDIs) Act, 2016 (Act 930).

However, the BoG has indicated that the shareholders of Capital Bank will not be compensated. The same may apply to UT Bank shareholders, though the central bank is considering compensating shareholders listed on the Ghana Stock Exchange.

Top level management of the two banks, including the Managing Directors, will lose their jobs. It is unclear the fate of the other workers of the two banks, numbering close to 2,000 in total, but negotiations are in place to protect those who want to still work for the distressed banks.

Possible negligence

Research indicated that UT Bank in a precarious position given it was found to be the riskiest bank in Ghana listed on the stock exchange.

The situation with Capital Bank has been found to be more nefarious given the existence of a leaked 2014 memo indicating that the bank, then First Capital Plus Bank, was on the verge of collapse.

The bank’s Chief Executive Officer at the time even described the situation as a “time bomb.”

The August 2014 memorandum, signed by the CEO of the Bank at the time, John Kofi Mensah, warned that Capital Bank had capitalization issues and may not be able to meet its obligations to its clients.

The memo addressed to the Board of the Bank, also outlined cases of mismanagement that had compromised their shareholder’s credibility.

–

By: Philip Nii Lartey/Delali Adogla-Bessa/citifmonline.com/Ghana

The post Banks collapse: BoG’s actions appropriate – Ken Thompson appeared first on Citi 97.3 FM - Relevant Radio. Always.

According to an Economist, Ken Thompson, the financial support presently coming in from international donors will not be enough to sustain the programme.

[contextly_sidebar id=”rMbIhEwwyFrTH2Jizr8dcv7DCwQnzET7″]He believes it would rather be advisable for government to invest in the production sectors to empower Ghanaians to solely fund the education of their children without government’s support.

“The free SHS programme that the government announced is premature. I know the Canadaian government is giving us about 125 million dollars but it is not enough. This is the time that we should be investing and trust me, if Ghanaians have jobs, even the pressure for them to ask for free SHS will go down. Let us use the little money we have now and invest in the production sectors.Bob Marley said a hungry man is an angry man. When you are hungry, you cannot even think. The government cannot do everything. They just have to focus,” Mr. Thomspon suggested on the Citi Breakfast Show.

Cedi depreciation

On cedi depreciation, the Economist said the value of the cedi keeps depreciating because there is “more demand than supply.”

He said Ghana will have a stable currency if the country decides to increase exports and reduce imports.

“You cannot expect to import everything, export very little and have a stable currency. That doesn’t happen. As far as I am concerned…I really believe and now let’s invest in agriculture and let’s see so we can increase our exports and any attempt by the Central government to intervene will fail because it is a demand and supply issue.”

“Anytime the Central Bank says that it is going to intervene to stabilise the currency we panic. We panic because we all know that the Central Bank has not gotten the pocket so why are we stretching ourselves with cedi depreciation. Because we do not export. We export very little and import everything. Allow it to depreciate. The main issue is a supply and demand situation and anytime somebody says they are going to intervene, I know they are going to fail.”

Official figures from the Bank of Ghana show that the cedi had depreciated by 1.3 percent to the dollar as at January 19, 2017.

The figure however represents a sharp decline from the 9.2 percent recorded in December 2016.

–

By: Marian Ansah/citifmonline.com/Ghana
Follow @EfeAnsah

The post September schedule for free SHS “premature” – Economist appeared first on Citi 97.3 FM - Relevant Radio. Always.