Former President John Dramani Mahama has outlined his intentions to reinstate the licenses of indigenous banks that collapsed in 2019 if he is elected in the 2024 general elections.
During his acceptance speech as the NDC flagbearer in Tamale, Mr Mahama unveiled his plans to restore the licenses of the collapsed banks.
Speaking at the CEOs Summit in Accra on May 22, Mr Mahama criticized the unjust collapse of some banks due to personal vendettas against major shareholders in the financial sector.
Mr Mahama provided an example, stating, “I said one bank was shut down because there was criminal prosecution against its major shareholder. It had nothing to do with the bank, and there might be other such cases, so we need to look at all of them and see whether the withdrawal was just or it wasn't.”
Furthermore, he raised concerns about the potential repercussions of applying similar principles to existing banks, given the impact of the Domestic Debt Exchange Programme (DDEP) on their financial stability. He questioned whether the licenses of some existing banks would also be at risk.
However, Joe Jackson, the Director of Business Operations at Dalex Finance, expressed scepticism about the feasibility of restoring the licenses of collapsed banks in the future.
Jackson emphasized the challenges associated with the passage of time and the need for re-capitalization and rebuilding client trust.
Considering the elapsed time, Jackson stated, “It's really going to be a difficult thing to do because of the entanglement and so much time has passed. Assuming that Mr Mahama wins the 2024 general elections, he will assume office in 2025, which will be close to 7 years since the clean-up in the banking sector.”
He further questioned the practicality of reinstating licenses, as it would require the re-capitalization of the banks and the establishment of new institutions to regain client trust. Jackson highlighted that restoring licenses is a complex issue and raised questions about the justification for the banks' initial closure.
The government's banking clean-up exercise in 2020 incurred a cost of approximately GH¢21 billion, and numerous institutions had their licenses revoked due to corporate governance issues.
