Ken Ofori Atta
Ken Ofori Atta

The Finance Minister, Mr Ken Ofori-Atta, Wednesday said government has not intentionally collapsed any financial institution but rather they were insolvent.

“Government has not, under any circumstances, intentionally collapsed any financial institution. These institutions were insolvent and/or distressed as a result of their own actions, and their respective regulators stepped in to intervene and to save over 4m depositors and investors.”

The Finance Minister made the statement when he delivered the 2020 Budget Statement and Economic Policy to Parliament in Accra.

He said over the past two years, Management of the Securities and Exchange Commission has worked on various reforms and appraised the state of operators in the fund management industry.

“In line with the powers vested in the Commission under Act 929 sections 3 and 122, the Commission revoked the licenses of 53 fund management companies on Friday, November 8, 2019.

“Of these firms, 21 had ceased operations, with the remaining 32 in various states of distress and/or regulatory non-compliance before the revocations,” Mr Ofori-Atta stated.

“Through this firm and decisive intervention, the Commission will preserve the investments of more than 77,000 retail investors and more than 4,700 institutional investors. The investment portfolios of the affected firms amounted to GH¢8 billion, of which GH¢2.4 billion (30%) was invested in treasury bills, banks and listed equities. The actions affected 249 licensed representatives.”

The Finance Minister said the exercise sought to protect investors, restore transparency and introduce greater accountability while instilling higher ethical standards through improvement of the licensing and supervisory framework.

Touching on fiscal impact of the financial sector’s clean up, Mr Ken Ofori- Atta noted that the intervention by Government to save depositors and investors whose funds were locked up with failed financial institutions had been very costly.

“In 2017 and 2018, Government spent a total GH¢11.7 billion to safeguard the deposits held by universal banks that were resolved by Bank of Ghana, and to set up the Consolidated Bank Ghana (CBG) Limited. These amounts were mainly through the issuance of government debt to both GCB Bank and CBG.”

Mr Ofori-Atta said this year the Government had to again intervene to provide relief to depositors when the Bank of Ghana revoked the licenses of 347 Micro Finance Institutions, 15 Savings & Loans and eight Finance Houses.

“The total bailout cost estimate for this exercise was GH¢2.4 billion,” he said.

“Mr. Speaker, the Securities and Exchange Commission also revoked the licenses of 53 Asset Management Companies that were distressed, with an estimated fiscal cost to protect investors of GH¢1.5 billion.”

“In addition, Government also provided bridge funding of up to GH¢800 million for Ghana Amalgamated Trust (GAT) to enable it to invest in four (4) indigenous banks that were struggling to meet the minimum capital requirement of GH¢400 million,’’ The Finance Minister said.

Those interventions, he noted, were timely to ensure that the Government safeguarded the financial system, provided relief for many families and businesses, as well as protected jobs and local interests in the financial system.

“We acknowledge the pain and distress that has befallen depositors and investors, including pensioners, market women, churches who placed their confidence in these financial institutions.”

“The on-going prosecutions will ensure that all those culpable as well as the negligent officials of the regulators will face justice as soon as possible. With this clean-up, the financial sector is now sanitized and the public should have confidence in the sector.”


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