He accused Mr Adu of deliberately ignoring evidence that justified the overhaul of the banking sector.

According to the former organiser, the Bank of Ghana and the IMF’s Asset Quality Reviews identified multiple undercapitalised banks in 2014/15, prompting the establishment of statutory reforms through Act 930.

“These institutions… had lost their franchise value,” he stated, and needed resolution before causing a wider systemic collapse.

He praised the NPP’s 2017 financial sector clean-up for preventing a full-blown banking crisis and safeguarding investments, including those in Cal Bank—a move he said also benefitted Mr Adu.

“No one was ready to invest in an entity that had lost its franchise value… The exercise of consolidation was to save deposits and as many jobs as possible,” he explained, noting that Mr Adu’s own investment was protected by government intervention.

He concluded by pointing to the sector’s impressive post-clean-up performance—stating that the financial industry’s total asset base grew by 33.8%, deposits rose by 28.8%, and liquidity ratios improved.

“All the performance indicators show that the sector… returned to profitability at the end of 2024,” he concluded, challenging Mr Adu to revisit the factual record before making further claims.

Source: Myjoyonline

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This according to him is because the country “generated $28.6 billion from it (remittances) over a 10-year period as compared to $18.7 billion from cocoa and $7.6 billion from gold.”

Speaking at the third edition of the Graphic Business/Stanbic Bank Breakfast Meeting on August 20, at the Labadi Beach Hotel in Accra, Dr. Atuahene stressed that if the revenue generated from gold is added to that of cocoa, remittances will still top leaving a gap of $2.3 billion.

“So that is why some of us have described it as gold, super gold, because it is something if it is well structured, captured, traced into the balance sheet, I think Ghana will be somewhere, I think maybe near Dubai because it is something that will support the economy,” he added.

The comment follows a World Bank report which estimated that about $27.6 billion worth of remittances flowed into Ghana’s economy between 2016 and 2022.

This was in contrast to the Auditor General’s reports on the Bank of Ghana’s consolidated statements of foreign exchange receipts and payments within the same period which accounted for only $22 billion.

The amount leaves a gap of some $5.6 billion.

Touching on this, the banker said the country would earned more if these remittances are well-traced and captured.

“…. I am only talking about the remittances captured by the central bank. The difference between the World Bank is $36 billion, but the country captured only $28 billion, so if we were able to trace, track and capture, we would have captured about $36 billion and that is far more exceedingly above gold and cocoa”, Dr Atuahene said.

The third edition of the Graphic Business/Stanbic Bank Breakfast Meeting is being held under the theme “The Remittance Ecosystem Impact on the Economy.”

Source: JoyBusiness

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According to the Bank of Ghana March 2024 Monetary Policy Committee report, private sector credit growth by banks remained sluggish, with February 2024 showing a 5.1% increase compared to 29.5% growth in February 2023. Conversely, investments by banks in Government of Ghana (GOG) and Bank of Ghana (BOG) instruments surged to GH¢53.6 billion, marking a 67.6% year-on-year rise, contrasting with a 36.9% increase in the corresponding period of 2023.

The Central Bank at its last Monetary Policy Committee meeting in March 2024 announced an adjustment for the existing Cash Reserve Ratio of 15% with a now graduated ratio based on the existing loan to loan-to-deposit ratio. They were banks with a Loan to Deposit ratio above 55% will have to meet a CRR of 15%, banks with a Loan to Deposit ratio between 40% to 55% will have to meet a CRR of 20% and banks with Loan to Deposit ratios below 40% will be required to hold a CRR of 25%.  

But the research by Dr. Richmond Atuahene (Banking Consultant), Isaac Kofi Agyei (Data & Research Analyst), and K.B Asante (Chartered Certified Accountant) warned of a probable banking sector crisis in the medium and long term as a result of this policy.

This situation, it explained, could ultimately result in the collapse, merger, and acquisition of commercial banks as a measure to safeguard depositors’ funds.

“If the central bank decides to maintain the increase in the Cash Reserve Ratio, there’s a high probability of another banking sector crisis emerging in the medium and long term. This situation could ultimately result in the collapse, merger, and acquisition of commercial banks as a measure to safeguard depositors’ funds”.

BoG’s CRR has a notable flaw

The report also stated the BoG’s policy on the New Cash Reserve Ratios has a notable flaw in that it overlooked the GH¢50.6 billion worth of government bonds that were previously restructured during the Domestic Debt Exchange Programme (DDEP). These bonds constituted part of the commercial banks’ total deposits of GH¢224 billion, with customers’ deposits being utilised for purchasing these government bonds.

Consequently, it said the Bank of Ghana should have considered the GH¢50.6 billion of bonds that were restructured before implementing the new, higher Cash Reserve Ratios; otherwise, it amounts to double accounting. The government bonds have a final maturity period in 2031.

BoG urged to reconsider reducing CRR

The report said while it can be beneficial for central banks to implement higher Cash/Primary Reserve ratios to control inflation and stabilise the local currency’s value, excessive ratios can lead commercial banks to hold more cash with the central bank, thereby limiting their ability to lend.

Conversely, lower cash reserve ratios allow banks to maintain less cash with the central bank, boosting their lending capacity.

The report urged the Bank of Ghana to reconsider reducing the mammoth cash reserve ratios by taking into account the GH¢50.6 billion of customers’ deposits used to purchase restructured government bonds with an extended maturity period until 2031.

Furthermore, it wants the Bank of Ghana and commercial banks to exert significant effort to reduce the current Non-Performing Loan (NPL) ratio from 24% to around 10% to fortify the banking sector’s resilience, adding, “a resilient banking sector encompasses more than just profitability; high NPLs can lead to poor capitalization among banks, liquidity challenges, and even insolvency for some institutions”.

Over the past two years, the private sector has suffered due to the government’s overwhelming presence in the treasury bill market.

The report said to revitalize the private sector, authorities must focus on lowering short-term bill rates below 20% to foster competitiveness in the domestic market. Additionally, efforts should be made to curb the increasing diversion of credit from the private sector to the central government.

Cash and bank balances was the second largest component of total assets with its share improving from 29.1% percent to 30.7% over the same period.

The proportion of net advances in total assets, however, declined to 23.8% from 28.2% while the share of non-earning assets reduced from 10.6% to 9.1% during the review period.

The Central Bank disclosed that the asset structure of the banking industry’s balance sheet in December 2023 reflected banks’ preference for less risky assets.

Share of deposits up to 78%

On the liability side, the share of deposits in banks’ liabilities and shareholders’ funds increased to 78.0% in December 2023, from 75.5% during the same period in the prior year.

The decline in borrowings translated into a decreased share of 5.5% in December 2023, compared to 8.9% a year earlier.

Following the strong growth in profits after tax, the proportion of shareholders’ funds in banks’ total funding improved to 10.6% from 8.7%.

The share of other liabilities, however, declined from 7.0% in December 2022 to 5.9% in December 2023.

Interest income accounts for 76% of banks’ income

Meanwhile, interest income was the largest component of banks’ income streams in December 2023, accounting for 76.8% of banks’ income compared to 75.7% in December 2022.

The share of banks’ income from fees and commissions however, declined to 10.8% from 11.3% in 2022 while the proportion of other income in total income was lower at 12.4% in December 2023 compared to 13.0% in December 2022.

As a graduate of the University of Development Studies, Chef Faila was once a devoted banker and a staff of the Bank of Africa in Tamale.

She described her life as a banker as exemplary, as she was hardworking and marketing effectively for the brand.

However, Chef Faila said she could not ignore the burning desire for cooking, which is her true passion, while banking was an aspiration she took in honour of her parents.

In view of this, she made the courageous decision to resign and follow her true calling in the culinary world, despite her significant contributions to the Bank of Africa.

She recounted how she had to submit a letter of resignation three times before it was finally accepted with reason that it was a big deal to lose someone as industrious as her at the bank.

Nonetheless, she pursued her cooking dreams and started working as a chef without prior qualification or training.

She immersed herself in various learning experiences, including stints at Aliu Mahama Hotel, Mafara Hotel, and exposure to top chefs in Indian and Chinese restaurants.

Chef Faila said she felt a sense of satisfaction pursuing her dreams since she has always wanted to be associated with food.

In her view, her cook-a-thon attempt and the positive responses she has received from her client is a testament that she made right decision.

According to him, the economic policies being undertaken by the NPP government were only to fix the fundamentals of the economy following the recent banking crisis where seven banks have collapsed.

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“We inherited a bad economy from our colleagues in the NDC. The prompt response from the Akufo-Addo government on the financial sector should be lauded and not condemned,” he said on Okay FM, monitored by Adomonline.com.

About GHc11 billion has, so far, been spent on the collapsed banks to protect depositor’s funds.

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The Central Bank is believed to have injected over a billion cedis into GCB Bank after it took over the assets and liabilities of UT and Capital Bank, and more than nine billion cedis into Consolidated Bank (force merger of Beige, uniBank, The Royal, Construction and Sovereign Bank).

The Bank of Ghana has already established the Office of Ethics and Internal Investigations to investigate their own official, current and former, found culpable regarding the collapse of these seven banks.

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This the Effutu MP said was President Akufo-Addo’s vision for the banking sector to have few but stronger local banks which can compete with their foreign counterparts.

He further called on the leadership of the bank of Ghana to be consistent in their supervisory efforts to ensure that more banks do not collapse.

The Central Bank, in its latest Monetary Policy Report for the first quarter of this year, said the finalization of the restructuring arrangements for Bulk Distributing Companies’ debt, continued repayments of the restructured Volta River Authority (VRA) and Tema Oil Refinery debts, and conclusion of the minimum capital requirements for banks will boost the stability and liquidity of the banks.

The report however said there was mixed performance of key financial indicators.

Instructively, the performance of the banking sector reflected strong asset growth on the back of increased foreign assets and investments, as well as a pickup in credit extension.

The industry’s Capital Adequacy Ratio also posted 37-months high of 18.5 percent in February 2017 against 17.8 percent in December 2016 on the back of strong growth in the adjusted capital.

Asset quality continued to improve as non-performing loans ratio declined to 17.7 percent in February 2017 from the 17.3 percent in December 2016. It was however 18.0 percent in January 2017.

The increase in the NPL ratio between December 2016 and January 2017 was partly explained by outcome of the Asset Quality Review and downgrading of loans by some banks.

The industry’s annualized profitability indicators improved in the year.

Return on Assets declined marginally from 4.1 percent in December 2016 to 4.0 percent in February 2017. Similarly, Return on Equity fell to 19.6 per cent in February 2017, from 24.3 percent in January (18 percent in December 2016) on account of decline in banks’ net profit after tax over the first two months of 2017.

The banking industry’s other liquidity indicators, however, broadly improved over the period.

Banks in Ghana registered a negative 4.3 percent for the 2016 financial year, according to the Financial Stability Report by the Bank of Ghana.

This was however an improvement from a negative growth of 7.4 percent recorded during the same period last year.

The banking sector’s income before tax registered an annual growth of 0.9 percent for the period ending December 2016 compared to a year-on-year contraction of 3.1 percent in December 2015.

According to the report, the year-on-year growth of the industry’s net interest income declined from 35.2 percent in December 2015 to 17.1 percent in December 2016.