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Former President of the Ghana Association of Banks, Alhassan Andani, says the banking sector crisis was not a systemic crisis but instead an institutional one.<\/p>\n
According to him, most of the top players in the banking sector had identified and taken precautionary measures against banks at risk of insolvency long before the Central Bank had raised red flags concerning those banks.<\/p>\n
He noted that if those top banks had been unduly exposed to the defaulting banks, the collapse of the defaulting banks would have had a much more resounding effect in the country\u2019s economy.<\/p>\n
He stated that the Bank of Ghana should have realized earlier what was going on within the banking scene and taken appropriate measures, however, the BoG continued to provide liquidation to defaulting banks long after most banks had cut credit ties with the unhealthy banks.<\/p>\n
Speaking on JoyNews\u2019 PM Express Business Edition, he explained, \u201cInstead of the regulator \u2026 stepping in at the right time they were getting liquidity support. But typically the liquidity support from the banking sector clears within the banking sector.<\/p>\n
\u201cIn the morning there will be a bank that has surplus cash and they know that I can\u2019t use that there\u2019s a bank that has cash needs so you\u2019ll throw within a certain agreed limit and then it clears out the next day, all those are what we do.<\/p>\n
\u201cBut when you\u2019re cornered, you\u2019re always out there in the market picking up someone will say \u2018what\u2019s happening to this bank?\u2019 then people start to withdraw their [funds]. So at the peer level, certain banks knew that other institutions within that space were not healthy enough and therefore cut off their lines of credit.<\/p>\n
\u201cThat should have been a signal to the Central Bank. And if you go there for liquidity support number one and come back number two there\u2019s a problem. Somebody should be sitting there helping you to balance your assets and liability.\u201d<\/p>\n
He believes the liquidity support should have been stopped to allow the banks go down by themselves.<\/p>\n
\u201cYes, and then we would have had one institution gone and the others would be resolved, instead of trying to condone as many of them as possible then you had such a huge institutional impact. But even then, look at it, none of the top 10\/12 banks were impacted because it was not systemic.<\/p>\n
\u201cSystemic is where you believe that this bank was healthy and everybody was dealing with them and suddenly they couldn\u2019t meet up. Then the default of one bank will affect a healthy bank because that healthy bank had exposures to the defaulting bank. That\u2019s systemic risk.<\/p>\n
\u201cBut in the case of what happened in Ghana, there was very little systemic risk because we know those that were already at the bottom ready to go,\u201d he said.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
Former President of the Ghana Association of Banks, Alhassan Andani, says the banking sector crisis was not a systemic crisis but instead an institutional one. According to him, most of the top players in the banking sector had identified and taken precautionary measures against banks at risk of insolvency long before the Central Bank had […]<\/p>\n","protected":false},"author":1,"featured_media":1213725,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[72],"tags":[15476,26608,2408,1856,932,14842],"class_list":["post-1213723","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-alhassan","tag-andani","tag-banking","tag-crisis","tag-sector","tag-systemic"],"_links":{"self":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1213723","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/comments?post=1213723"}],"version-history":[{"count":0,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1213723\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/media?parent=1213723"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/categories?post=1213723"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/tags?post=1213723"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}