As calls intensify for the reinstatement of licenses for collapsed local banks, Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISSER), has issued a stark warning to the government and the Bank of Ghana to make haste slowly in any planned restoration of licenses.
In the wake of Dr. Johnson Asiama’s appointment as the new BoG Governor, there’s been renewed pressure to reconsider the closure of several banks affected by the banking sector cleanup, including GN Bank and Heritage Bank. However, Prof Quartey stresses that hasty decisions could destabilize the financial sector and erode investor confidence
“We should tread cautiously. You don’t want to set a precedent where the Central Bank takes a decision and then reverses it. If anyone has issues with that decision, they can challenge it in court,” Quartey advised in a recent interview
Dr. Papa Kwesi Nduom, founder of GN Bank, has consistently argued that his bank’s closure was unjust. Seidu Agongo, majority shareholder of Heritage Bank, has voiced similar concerns, claiming procedural flaws in the revocation process.
However, former BoG Governor Dr. Ernest Addison firmly opposed restoring any revoked licenses before his early retirement, citing the need to protect sector integrity
The banking sector cleanup, which saw the collapse of multiple indigenous banks was aimed at strengthning the financial system. But with foreign entities now controlling two-thirds of Ghana’s 23 commercial banks, concerns over the erosion of local ownership have resurfaced
Prof Quartey acknowledges these concerns but warns that reversing BoG decisions without a thorough, independent review could undermine the credibility of the Central Bank, destabilize the financial sector, leading to liquidity risks and investor uncertainty, set a dangerous precedent, making future regulatory actions vulnerable to political and legal reversals.
For any license restoration to succeed without destabilizing the market, experts advocate for independent forensic audits of the affected banks to assess their financial health and compliance with regulatory standards, clear legal pathways for aggrieved parties to challenge BoG decisions in court, rather than relying on political influence and a strengthened governance frameworks to ensure future banking sector stability.
Prof Quartey’s call for caution reflects a broader sentiment among financial experts: regulatory integrity must not be compromised in the pursuit of justice or political expediency. The potential reinstatement of bank licenses could have mixed implications for investor confidence. There could be a positive impact if seen as an effort to correct past injustices and strengthen local ownership.
Nevertheless, a negative repercussion if viewed as regulatory inconsistency, leading to concerns about the BoG’s authority and decision-making process.
With Ghana’s economy navigating currency fluctuations, inflationary pressures, and debt restructuring, the banking sector’s stability is more critical than ever.
For now, Professor Quartey’s advice is clear—“Don’t rush”—because the cost of a hasty decision could
be far greater than the desire to make things right.
