Govt unjustifiably collapsed some banks due to ‘personal vendetta’ – Mahama

Former President John Dramani Mahama has provided details of his decision to restore the licenses of some indigenous banks that were collapsed in 2019 if elected in the 2024 general elections.

Mr. Mahama announced these plans during his acceptance speech as the NDC flagbearer in Tamale last week.

Speaking at the CEOs Summit in Accra on May 22, Mr. Mahama expressed that some banks were unjustifiably collapsed due to personal vendettas against major shareholders in the financial sector.

“Definitely l gave you an example, 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”.

“And the point even is, if you wanted to apply such position, with this Domestic Debt Exchange Programme (DDEP), are you going to shut down existing banks? Existing banks have been weakened by this DDEP. If you apply the same principles you applied to indigenous banks, you [government] probably will withdraw licenses of some existing banks,” the former President explained.

However, Joe Jackson, the Director of Business Operations at Dalex Finance, believes it would be practically impossible for future governments to restore the licenses of the collapsed banks.

He highlighted the challenges and complications involved, such as the passage of time and the need for re-capitalization and rebuilding client trust.

“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”.

“It becomes very difficult to understand how you are going to restore all these licenses. When you restore their licenses, does it mean that they will come back and re-capitalise? Set up another institution to get their clients back? The practicality is not that simple, restoring licenses is a very complicated issue. Were the banks unjustifiably taken? And how practical is it? It’s going to be difficult, challenging and not practicable,” the Director of Business Operations at Dalex Finance said on Citi TV/Citi FM’s news analysis programme, The Big Issue over the weekend.

The banking clean-up exercise by the government in 2020 cost around GH¢21 billion, and several institutions had their licenses revoked due to corporate governance issues.