The flagbearer of the New Patriotic Party (NPP) has criticised the National Democratic Congress flagbearer, John Dramani Mahama over his promise to restore the licences of some collapsed financial institutions.
Mahama, during the launch of the NDC’s manifesto at Winneba, promised to restore the licenses of financial institutions that he said were unjustly collapsed by the NPP government.
However, in a media engagement, Dr Bawumia expressed surprise at Mahama’s stance, stating that the NPP’s actions saved the deposits of 4.6 million bank customers who would have lost their funds if the banks had not intervened.
He explained that some banks had engaged in egregious practices, such as extending loans beyond legal limits, misusing capital, and investing in private properties.
Dr. Bawumia emphasised that the banking sector was on the brink of collapse, necessitating the merger of some banks to prevent a systemic crisis.
He advised Mahama to read the reports of the Receiver and the Bank of Ghana to understand the situation before making further comments.
“We saved the deposits of 4.6 million bank depositors who really were going to lose their deposits if those banks were not saved. I don’t understand whether the former president has taken his time to understand the banking sector. Some atrocious things and this is why these banks had to be saved.
“They were not collapsed, they were merged into other banks and no banking depositor lost 1 cedi, everybody maintained. But very bad things happened, some of the banks broke all the rules and extended loans way above the single obligor limits.”
“They were given, in some cases 1 billion by the Bank of Ghana to help them out of the mess and they only got deeper into the situation. Other banks were given capital to save the situation, and they used that money to set up Capital Bank, instead of rescuing the problem that they had. They took the money from the central bank and set up another business which also collapsed. Some took money and invested in private properties.”
“So, it was against this background the governor came to report, and this was one of my nightmares in the last eight years. Most people didn’t understand how close we were to a collapse of the entire banking system. This is how we had to merge many of these banking sectors into other banks and we saved 4. 6 million depositors.”
“I’ll ask the former president if he hasn’t read, to go and read the receiver’s report or the BoG’s report and acquaint himself before making any further comments on matters he clearly doesn’t understand.
He needs to get an understanding before making further comments and he cannot hand over a bank’s licence to them, this is subject to legal procedure.