Wednesday, 29 May

Bank clean-up: One was collapsed because its major shareholder was being prosecuted - Mahama justifies promise to restore bank licences

Heritage Bank

Former President John Mahama has said the unjustified collpase of some banks by the Akufo-Addo government justifies his promise to restore their licences should he win the 2023 elections.

Speaking at the CEO's Summit in Accra on Monday, 22 May 2023, a few days after making the promise in Tamale, Northern Region, Mr Mahama cited an example to buttress his point.

"One bank was shut down because there was criminal prosecution against its major shareholder", the former president said. 

"It had nothing to do with the bank", he noted, adding: "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".

Mr Mahama pointed out that "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?"

He said "existing banks have been weakened by this DDEP", noting: "If you apply the same principles you applied to indigenous banks, you probably will withdraw the licences of some existing banks".

The Bank of Ghana revoked the licence of Heritage Bank Limited on Friday, 4 January 2019 on the basis that the majority shareholder, Mr Agongo, among other things, used proceeds realised from alleged fraudulent contracts he executed for the Ghana Cocoa Board (COCOBOD), for which he and former COCOBOD CEO Stephen Opuni are being tried, to set up the bank.

Announcing the withdrawal of the licence, the Governor of the central bank, Dr Ernest Addison told journalists – when asked if he did not deem the action as premature, since the COCOBOD case was still in court – that: “The issue of Heritage Bank, I wanted to get into the law with you, I don’t know if I should, but we don’t need the court’s decision to take the decisions that we have taken. We have to be sure of the sources of capital to license a bank; if we have any doubt, if we feel that it’s suspicious, just on the basis of that we find that that is not acceptable as capital. We don’t need the court to decide for us whether anybody is ‘fit and proper’, just being involved in a case that involves a criminal procedure makes you not fit and proper”.

HBL was added to Consolidated Bank Ghana Limited (CBG), which was first formed when the central bank collapsed some five local banks in August 2018. 

They included The Royal Bank, The Beige Bank, The Construction Bank, Sovereign Bank and uniBank. Later on, HBL and Premium Bank were added to the first five.