Bolgatanga Central MP, Isaac Adongo, has accused the Securities and Exchange Commission (SEC) of engaging in deliberate acts resulting in the collapse of some local banks.

CBG was recently formed by the Bank of Ghana (BoG) when it fused together five struggling local banks, including The Beige Bank, Sovereign Bank, The Royal Bank, uniBank and The Construction Bank.

According to Mr Adongo, the Securities and Exchange Commission (SEC) and “Rev Ogbamey Tetteh, who resigned from his job as a Vice-President of Databank to be appointed as the Director-General of SEC, administered the last dose of poison to the Ghanaian banks and delivered their death certificates”.

He explained on Sunday, 12 August 2018, that the SEC, in a dangerous directive issued to asset or fund management companies in 2018, signed by Rev Tetteh, incited the fund management companies “to run in on banks”.

According to Mr Adongo, Rev Tetteh “directed the fund managers to wind down their investments in six months. That is to say, they should redeem all their investments in six months”.

He continued: “It is instructive to know that these fund managers mobilise a lot of deposits and invest them in financial and other instruments to earn spreads or profits. As of the end of June 2018, these fund managers had mobilised and invested GHS30.7 billion in Ghana’s financial sector. The biggest investments held by fund managers are term deposits in local banks.

“Thus, the directive to wind down these investments has resulted in fund managers issuing large claims or triggering redemptions of their investments in local banks and moving these funds to foreign banks as safe havens”.



The legislator noted that as a result, local banks that hold these funds have become insolvent in just two months. He cited an example indicating that Beige Bank held GHS2 billion of fund managers deposit at the end of May.

“As a result of the directive by SEC, Beige Bank saw a redemption or withdrawal of GHS1.5 billion by fund managers in compliance with SEC’s directive.

“Show me any Bank that is only seven months old that will lose GHS1.5billion liquidity and still remain solvent. So, SEC creates insolvent local banks for Bank of Ghana (BoG) to move in and collapse them under the guise of insolvency.

“I know of a local bank owned by hard-working Ghanaian entrepreneurs that holds GHS4 billion of fund managers’ investment. If that bank meets the GHS400m minimum capital but fund managers redeem their GHS4 billion deposits with the bank, it will have a hole of GHS3.6 billion and will, straightaway be highly insolvent and prey for BoG,” he explained.

For him, SEC cannot be innocent in the collapse of local banks due to unfavourable policies and regulations in the past months.

“Show me an investor who concludes due diligence and valuation of a target bank to invest in and in one month, sees that the bank has lost GHS1.5 billion deposits resulting not from market conditions but regulatory stance and will not flee with the money? That is the fate of local banks now. Their deals to meet the minimum capital are crumbling due to the incitement of SEC, which is resulting in a run on. This has weakened their business case and valuations.

“For me, the SEC, now headed by a former Databank Vice-President, is now an undertaker and a graveyard for our local banks and financial institutions. Ghana’s financial sector is on the verge of a shutdown as a result of this singular vindictive SEC directive,” he concluded.



Meanwhile, Mr Adongo is worried over what he described as the “regulatory dominance and fingerprints of Databank and Enterprise Group on the banking sector”.

He revealed that in 2017, “when founding members and staff of Databank were being appointed to directorship positions in financial sector regulatory agencies, I warned Ghanaians that the Finance Minister, Mr Ken Ofori-Atta, was going to be the biggest threat to Ghana’s financial and banking sector's stability and growth”.

“Since then, Ghana has experienced very unprecedented decline and collapse of the sector. This has resulted from self-seeking and politically motivated regulatory environment. It is no secret that a Universal Bank is the only missing business in Mr Ofori-Atta’s collection of investments.

"Only recently, his Enterprise Group hinted that they were on a look out for a prey. Enterprise Group to buy a bank? Why now? Is that why our banks are being run down by regulatory conduct so they can be picked up by Databank and Enterprise Group for peanuts? We must be worried,” he said.