She said the resulting costs to the nation due to the recent banking crisis had been staggering, stating that: “As a nation, we must resolve that never again will we allow this to happen.”

Mrs Awadzi was speaking at the annual general conference of the Ghana Bar Association (GBA) held on the theme: ‘Banking crisis- the role of the regulator’.

 “We must call out bad behaviour regardless of who is involved and be united around a set of values and standards to which we will hold banks and everyone else,” she stated.

“We must resolve that we will put our taxes to better uses than to mop up the mess that others leave behind,” she added.

Background

The BoG, in August last year, began taking steps to sanitise the country’s banking sector.

In all, seven banks - UT Bank, Capital Bank, uniBank, Sovereign Bank, Construction Bank, Royal Bank and Beige Bank - have lost their licences to date.

Four out of these banks were identified during the Asset Quality Review commissioned by the BoG in 2015 and updated in 2016 to be significantly undercapitalised, and thereafter became insolvent.

Three of the defunct banks were also cited for obtaining their licences by false pretences through the use of suspicious and non-existent capital, which rendered them significantly undercapitalised and/or insolvent.

Moral crisis

While some have called it a banking crisis, Mrs Awadzi said she preferred to call it a moral crisis characterised by a breakdown in values, unethical behaviour and disrespect for the sweat and hard work of others who toiled to put their savings in the banks.

She said the crisis was also characterised by gross disrespect for employees who toiled day and night to meet targets set for them, “a culture of borrowers not paying their debts, a culture of turning the other eye when the wrong things were being done because we are either too nice, too afraid or stand to benefit from the wrongdoing, and a culture of building personal empires at the expense of others”.

“These are the real issues that were at play,” she pointed out.

 Not all banks were wayward

The second deputy governor also noted that not all in the sector were wayward, and not everyone who was associated with the failed banks were complicit.

Unfortunately, she said, a few bad nuts created bad press for the industry as a whole.

“Thankfully, a good number of banks remain healthy and robust, and have met or are poised to meet the new minimum capital requirement of GH¢400 million by 31st December, 2018,” she noted.

“There are many success stories in the industry that continue to encourage us to remain resolved to promote a first-class banking sector in Ghana,” she added.

Disrespect for rule of law

Mrs Awadzi also explained that the turmoil that was created by the seven banks that failed was reflective of a creeping culture of disrespect for the rule of law, ethics and systems.

To be fair, banks, and indeed businesses in general, fail for all manner of reasons. The bank failures we have witnessed in Ghana in the recent past were, however, not caused by idiosyncratic forces external to these banks, neither were they caused by force majeure,” she stated.

“Several other banks operated in the same economic environment, but not all banks failed,” she said. — GB