He explained at a forum in Accra that the extension to the December 2018 deadline was needed to ensure that more local banks did not collapse in their attempt to recapitalise to the GH¢400 million by December this year.
He said unlike majority of the foreign-owned banks that had enough funds to be able to recapitalise within a short period of time, local banks and their shareholders were constrained by a myriad of challenges, including the government’s indebtedness to the sector.
As a result, he said, the central bank needed to treat them separately in its demand for the minimum capital of banks to be raised from GH¢120 million to GH¢400 million by December, this year.
He also advised Ghanaians to have faith in the indigenous banks, explaining that they were well-placed to weather the storm facing them and emerge victorious.
Mr Adongo, who is also a chartered accountant and a financial analyst, was speaking at a public forum on the theme: ‘Banking crisis: Roles played by stakeholders and directors.’
It was organised by the Public Analysis and Monitoring Centre (PAMC) to provide a platform for experts to deliberate on the roles of the key actors in the collapse of the seven banks over the last 12 months.
The founding President of IMANI Centre for Policy and Education, Mr Franklin Cudjoe, was a co-speaker.
Mr Cudjoe, who was earlier against the extension of the deadline, said he had revised his notes after a critical study of the situation.
He said the extension would help create a fair platform for both local and foreign banks to raise the needed capital.
Mr Adongo’s request for an extension in the recapitalisation timeline adds to similar appeals by the indigenous banks and other experts.
Earlier, the Association of Indigenous Universal Banks had argued that their respective financial situations made it impossible for them to recapitalise to GH¢400 million by December this year, as required by the BoG.
They, therefore, requested an additional four years to enable them to meet the BoG’s new capital demand.
Like the indigenous banks, Mr Adongo was worried that a refusal to extend the timeline beyond December 2018 would mean that the country could lose more indigenous banks, resulting in an increase in the dominance of foreign-owned banks.
That, he said, was injurious to the economy, given the impact on indigenous entrepreneurship, capital flight and job losses.
Currently, out of the 30 banks in operation, 13 are indigenous-owned banks while 17 are foreign-owned.
It follows the withdrawal of the licences of seven indigenous banks within the last 12 months for various infractions against the Banks and Specialised Deposits-Taking Institutions Act 2016, Act 930.
Otabil didn’t err
Touching on the role of directors in the collapse of the banks, Mr Adongo said a leaked report that sought to implicate the former Board Chairman of Capital Bank, Pastor Mensa Otabil, over his role in the collapse of the bank was misleading and ill-informed.
He said the originators of that report, Boulders Capital, lacked the competence to undertake an assurance on a bank.
That lack of competence, he stated, was evidenced in the firm’s conclusions that the board of the Capital Bank erred when it used some liquidity support from the BoG for loans.
“That report is the most useless piece of work and the most useless share of public funds to friends.
“Since this matter started, you realised that I have not commented on the role of Pastor Otabil. That is because he did no wrong, contrary to what the BoG and the government would want us to believe,” he stated.
As a bank, Mr Adongo said the Capital Bank's primary responsibility was the business of giving loans and taking deposits.
Therefore, by lending the funds to customers, he explained that the bank was only undertaking its core mandate, the reason Pastor Otabil should not be blamed.
He said until Boulders Advisors found something fundamentally wrong with utilisation of the funds, “the excuse that they gave it out as loans and, therefore, they erred could not be true.”