The New Patriotic Party (NPP) has stated that the Nana Akufo-Addo-led government inherited 418 financial institutions on the verge of collapse when it assumed office on January 7, 2017.

This comprises a total of nine universal banks, 23 specialised deposit-taking institutions, and 386 microfinance and credit institutions.

4.6 million depositors risked losing their investments

The NPP said an estimated 4.6 million depositors, thousands of retail, corporate and institutional investors were caught in the mess and risked losing their investments.

The party pointed out that the John Mahama-led National Democratic Congress (NDC) government superintended over a situation where the economy risked a total collapse barring decisive mitigating measures.

Addressing journalists in Accra, Nana Akomea, a member of the NPP campaign communication team, stated that having lost control over the fight to restore sanity in the banking sector, Mr Mahama and the NDC sat aloof as the problem metamorphosed into a full-blown crisis.

Bad loans jumped from GH¢2.72bn in 2014 to GH¢4.52bn in 2015

Detailing the genesis of the problem, he pointed to the 2016 Financial Stability Report of the Bank of Ghana, which revealed that bad loans on the books of commercial banks in the country increased by 14.9% to GH¢4.52 billion in 2015 as against the GH¢2.72 billion recorded in 2014.

NPLs rose from 11.2% in May 2015 to 19.3% in May 2016 Also, he said, the economic and financial data from the central bank showed that non-performing loans (NPLs) rose sharply from 11.2% in May 2015 to 19.3%in May 2016.

Nana Akomea recalled that the central bank, under the erstwhile Mahama administration, admitted in 2015 that the spate of non-performing loans on the books of banks was one of the major challenges faced by the banking sector.

“The central bank stated categorically that the level of impaired loans in one of the largest commercial banks had quadrupled, and the situation was becoming widespread in the banking sector,” he said.

GH¢2.4bn declared bad debt

The NPP campaign communication team member noted that due to the non-payment of these loans, the banks had declared GH¢2.4 billion of outstanding debt stock of loans as bad debt.

2015 Asset Quality Review exposed significant vulnerability

The 2015 Asset Quality Review of Banks exposed significant vulnerability of banks to the economic conditions at the time.

The review further stated that if the affected banks had attempted to cater for all the bad loans, a significant number of them would have collapsed.

Dr Bawumia’s warning about 8 banks in danger in 2016

He reminded Ghanaians that then vice-presidential candidate Dr Mahamudu Bawumia, realising the bad state of the banking sector, warned the Mahama-led government in September 2016 that eight banks risked collapse due to the increasing bad loans on their books.

He stated categorically that these eight banks recorded low capital adequacy ratios of below 10% and in some cases below 5%, leading to their near collapse.

Mahama admits to crisis in financial sector in 2016 SoNA

Nana Akomea referred to the State of the Nation Address in 2016 in which Mahama admitted to the financial sector crisis, saying Mahama’s solution to the crisis was to throw taxpayers’ monies at the financial companies.

GH¢620m liquidity support to Capital Bank

Capital Bank, for instance, was given GH¢620 million in tranches of GH¢150 million, GH¢300 million and GH¢170 million between June 2015 and November 2016, so as to recapitalise the bank to carry out its daily banking activities, including granting loans, improving cash flow and honouring cheques by depositors.

To buttress his point, he said Capital Bank literally squandered this large amount of taxpayers’ money.

GH¢860 liquidity support to UT Bank

UT Bank was given a total of GH¢860 million in tranches of GH¢50 million, GH¢150 million, GH¢200 million and GH¢460 million between February 2015 and May 2016.

GH¢3.1bn liquidity support to UniBank

UniBank was provided GH¢3.1 billion by the Mahama-led administration, but, he said, this did not stop the difficult situation and viability of UniBank.

Nana Akomea argued that the NDC’s intervention to provide liquidity support to banks that were on the verge of collapse without effective supervision was catastrophic to say the least.

Regrettably, he said monies allocated to safeguard depositors’ funds were insensitively misappropriated by heads of banking institutions, with government making no effort to demand accountability.

Akufo-Addo sensitive to the plight of Ghanaians

He said paying customers of the defunct financial institutions, including, especially, DKM, is a clear indication that the Akufo-Addo government is sensitive to the plight of Ghanaians.

Nana Akomea said the governing party was committed to building a strong economy where every Ghanaian would enjoy from their toil.

“It is worthy of note that government in the first quarter of 2020 expended an estimated GH¢13.6 billion, representing 3.5% of GDP, on the resolution of insolvent banks.

“The financial commitment made by government thus far is indicative of its resolve to create a highly robust and an internationally competitive financial sector capable of supporting the growth and development of firms, businesses and the various sectors of the economy,” he stated.

According to him, the timely release of funds to cushion the plight of the customers amid the coronavirus pandemic clearly shows that President Akufo-Addo has the citizens at heart.

Cognisant of the hardships and liquidity crunch occasioned by the COVID-19 pandemic, this could be described as a prudent approach to ease the already constrained economy, boost economic activity and expedite the return of the economy to normalcy, he added.

He stated that most of the promises Mahama is making to Ghanaians concerning the banking sector had already been fulfilled by the Akufo-Addo government.