Second Deputy Governor of the Bank of Ghana, Mrs. Elsie Addo Awadzi, noted that the Central Bank's decision to collapse and merge some seven defunct banks to form the Consolidated Bank Ghana Ltd saved some 3,500 jobs. “BoG’s actions against the failed banks and the Government’s decision to guarantee the deposits of the seven banks and the creation of CBG have helped to mitigate what could have been severe adverse consequences from these failures. When banks fail, there are usually a lot of casualties which, if not well managed, could lead to significant problems for the financial sector and the economy. The interventions of the BoG and Ministry of Finance (MoF) minimised job losses by saving some 3,500 or 70% of approximately 5000 employees of the defunct banks,” she said. Read the full story originally published on November 6, 2018 by thebftonline Second Deputy Governor of the Bank of Ghana, Mrs. Elsie Addo Awadzi, has said that the bank’s intervention on collapsing and merging the seven defunct banks to form the Consolidated Bank Ghana Ltd saved some 3,500 jobs. Some have called the central bank’s decision to collapse and merge the seven defunct banks ill-timed and disastrous, as it has led to some 1,500 job losses. But speaking at the Joy FM Financial Sector Forum held in Accra, Mrs. Awadzi justified the central bank’s decision, saying it rather minimised the job losses by 70 percent, which otherwise would have been lost if the action was not promptly taken. “BoG’s actions against the failed banks and Government’s decision to guarantee the deposits of the seven banks and the creation of CBG have helped to mitigate what could have been severe adverse consequences from these failures. When banks fail, there are usually a lot of casualties which, if not well managed, could lead to significant problems for the financial sector and the economy. The interventions of the BoG and Ministry of Finance (MoF) minimised job losses by saving some 3,500 or 70% of approximately 5000 employees of the defunct banks,” she said. See Also: Betway Ghana launches second edition of ‘Talent Search’ She added that the banking sector reforms have boosted the confidence of local and international investors and other market players, and have contributed to the recent upgrades of Ghana’s credit rating by Standards and Poors (S&P) to B- to B. Also addressing why there was the need to take such strong action against the banks, Mrs. Awadzi said the banks posed a significant risk to the economy and had to be helped to exit the market in an orderly fashion, especially, considering the extent of distress they were in. “Failed banks become serious sources of risk for the entire financial system and the economy as a whole, and must be made to exit before they collapse the whole system. What happens to the financial system affects everyone. The defunct banks had reached a point where they were no longer able to operate as banks. 4 of the 7 had been found to be significantly undercapitalized as of the 2015/16, and subsequently became insolvent when their capital was further impaired due to bad loans and other irrecoverable assets. The other 3 defunct banks obtained their licenses by false pretences through the use of suspicious and non-existent capital, which rendered them significantly undercapitalized compared to the minimum of GH¢120 million they were required to have,” she said. See Also: Guinness grabs ultimate award at 2018 Beverage Awards Going forward, the BoG will continue to strengthen its supervisory and regulatory role to ensure such a situation does not repeat itself. “On our part, we are strengthening our regulatory and supervisory capacity through improved systems, processes, accountability, and training, to enable our supervision staff to better monitor banks’ performance and conduct, and ensure that banks take prompt corrective action to address emerging risks. We are working with all stakeholders to rebuild confidence in our banking sector. There are great opportunities ahead for the industry to drive Ghana’s economic growth agenda, and we expect to see banks positioning themselves for these opportunities,” she said.