A renowned economist, Kwame Pianim, has said he put together a team of financial experts and discussed the impact of the Domestic Deebt Exchange Programme (DDEP) on banks and submitted a memorandum to President Nana Addo Dankwa Akufo-Addo, Vice President Dr Mahamudu Bawumia, and Finance Minister Ken Ofori-Atta but the concerns was ignored.
He stated that giving the banks a haircut just after the cleanup exercise in the baking sector was wrong.
On Monday, January 23, the Government of Ghana and the GAB reached an agreement on the new terms for the Domestic Debt Exchange programme. The banks had earlier rejected the programme as announced by the government.
The GAB directed commercial banks not to sign onto the amended debt exchange offer over uncertainty surrounding the impact of the debt restructuring on the banking industry.
The association wanted its concerns addressed before accepting the debt exchange offer, according to a letter sent to managing directors of banks.
The association told member banks that may want to consider the debt exchange in its current form to formally inform the association first before doing so.
“…From the uncertainty surrounding the programme, GAB recommends that all banks must stay any further movement on the exchange until our demands have been met. However, in the event that a bank may have to move forward to exchange, the MD/CEO must inform the CEO of GAB directly of the decision,” according to the letter sent to the banks.”
However, after an engagement with the Ministry of Finance, the Association of Banks said that per the new terms, the participation of member banks was subjected to individual bank’s internal governance and approval processes.
“This is a significant milestone towards addressing our economic challenges, and will thus help to restore macro-economic stability and accelerate Ghana’s economic growth.
“With this achievement, the Government of Ghana reiterates its commitment to concluding the DDEP in time with all other stakeholders,” a joint statement from the Finance Ministry and GAB noted.
Speaking in an interview with TV3’s Paa Kwesi Asare on the Business Focus on Monday, August 28, Mr Pianim said “I put together Dr Paul Acquah, myself, Ishmael Yamson, Sam Jonah, Ernest Aryitey from Bank of Ghana, Frank Adu , Mawuli Ababio and Togbe Afede, we sat for four days and crafted a memorandum which I sent to the president, copied the Vice President and the Finance Minister that this is the wrong way to go, we just finished cleaning up the banking sector so it doesn’t make sense to give a haircut to the banks to impair their capital adequacy ratio, some of them made the banks insolvent.
“But we were ignored completely, I am one of the foundation members of the NPP so if I could not get the ear, how do you expect the technician to get the ear of the president?
“The Bankers Association thought they had the mandate to negotiate, where did they learn their governance from? They are not shareholders of any bank, they should have said this discussion has to go to the shareholders, to the directors of the banks, we need 21 days to summon shareholders to come.”
Asked how he got to know that the bankers’ association did not consult shareholders, he answered “I am a shareholder of one of the banks but they didn’t consult me, people are angry with them.”
Source: 3News