BoG sued over announcements to close down some Savings & Loans companies

Business News of Monday, 26 November 2018

Source: Myjoyonline.com

2018-11-26

Dr. Ernest Addison, BoG Governor

A private citizen, Daniel Darko, has sued the Bank of Ghana after it announced that Savings and Loans companies that are in serious financial distress will be closed down.

Mr Darko is contesting the legitimacy of the BoG’s announcement, praying the Human Right Division of an Accra High Court to direct the central bank to retract the statement.

The plaintiff who is also the CEO of Ghatalia Limited, says the announcement has led to “predicting fear and panic within the Savings and Loans industry leading to bulk withdrawals by customers, a situation not only adversely affecting operations of the Savings and Loans in the financial sector which the Respondent superintends but also the applicant as well.”

“That failure of the respondent to follow laid down procedures in carrying out its mandate of closing down such Savings and Loans if need be, have such potential to affect applicants’ business including many other such businesses in the country,” the writ further stated.

Therefore, in exercising his right, Daniel Darko is asking for a “declaration that the said pronouncement to close some Savings and Loans companies has affected his business, thereby affecting his right to life and to participate freely in his chosen economic activity.”

He is also seeking “an order restraining the Respondent from making such further pronouncements on the activities of Savings and Loans Companies until it has completed resourcing the Consolidated Bank in other to meet demands of depositors/customers of the defunct banks.”

b>Consolidated Bank Ghana

The newly-established Consolidated Bank Ghana (CBG) upon taking over the five banks blocked fixed deposit accounts of customers of the defunct Beige Bank.

This meant clients of the defunct bank could no longer make withdrawals from the fixed deposit accounts.

It will also be recalled that Bank of Ghana on August 1, 2018, granted a universal banking licence to Consolidated Bank Ghana Limited established by the government after revoking the licences of uniBank Ghana Limited, The Royal Bank Limited, Beige Bank Limited, Sovereign Bank Limited, and Construction Bank Limited and appointed Nii Amanor Dodoo of KPMG as the Receiver.

All deposits of the five banks it said at the time that were safe, but had been transferred to the newly established Consolidated Bank.

This meant that customers could carry out their business as usual at their respective banks which became branches of the Consolidated Bank.

All staff of these banks also automatically became staff of the Consolidated Bank but Boards of Directors and shareholders of these banks no longer had any roles.

The central bank at the time stated that “Ghana needs a strong and stable banking sector to drive the process of economic transformation. A weak banking sector means that access to credit will be limited while lending rates will continue to be high.”

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