The Bank of Ghana has reiterated that the revocation of the licenses of some nine local banks was the right thing to do which saved the banking industry from systemic threats that could have significantly affected the Ghanaian economy.

Addressing the New Year School organized by the University of Ghana, the Governor of the Bank of Ghana, Dr. Ernest Addison, said the questionable billions of Ghana cedi liquidity support which were given to some of the failed banks, was misapplied and misappropriated.

“In the circumstance that the liquidity support was misused with some of them being used for placements, investments, financing, related party transactions and then loans to high politically-exposed people, non-executive directors of the banks compromised their independence and their fiduciary duties to serve as a check on executive directors”, the Governor said, adding: “Directors, managers of the bank misrepresented financials statements of the banks”.

“Non-executive directors were also acting as consultants to the same banks which raised conflict of interest situations; there was a general lack of adhering to credit management principles and procedures as the banks were heavily exposed to insiders and related parties. Banks were divergent holding companies and their related parties, placements could not be traced to the banks’ books though the Bank of Ghana has proved of their investments”, he emphasised.

The Governor noted that the reasons behind the collapse of the banks (Capital, UT, uniBank) were related, which he described as unacceptable.

He, however, said the banking industry was now safer, more sound, stronger and more robust.

“The performance of the banking industry in 2019 shows that a stronger banking sector has emerged, with improved solvency, liquidity and profitability. Further, asset quality in improving and banks’ resilience to shocks has been strengthened. The key financial soundness indicators remained positive throughout 2019 as banks adhered to sound banking practices following the reforms”, he mentioned.

Some key actors in the banking sector crisis were on Tuesday arrained.

The founder and former CEO of UT Bank and Chairman of UT Group of Companies, Mr Prince Kofi Amoabeng, was granted a GHS110-million bail with two sureties by an Accra High Court.

However, the founder and former CEO of The Beige Bank, Mr Michael Nyinaku, was remanded in police custody by the court for one week.

Also, Mr William Ato Essien, the founder and former CEO of another defunct bank, Capital Bank, as well as his former MD, Rev. Fitzgerald Odonkor, and two other persons; Dr Tettey Nettey, the Managing Director of MC Management Services, a company said to be owned by Mr Essien, and Kate Quartey-Papafio, a businesswoman and Managing Director of Reroy Cables Company Limited, are also being prosecuted.

Judgment is expected to be delivered by the High Court in respect of the Capital Bank case in February 2020.